Correlation Between Astrotech Corp and Vontier Corp

Can any of the company-specific risk be diversified away by investing in both Astrotech Corp and Vontier Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Astrotech Corp and Vontier Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astrotech Corp and Vontier Corp, you can compare the effects of market volatilities on Astrotech Corp and Vontier Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Astrotech Corp with a short position of Vontier Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astrotech Corp and Vontier Corp.

Diversification Opportunities for Astrotech Corp and Vontier Corp

0.41

Correlation Coefficient

Astrotech Corp  Vontier Corp

Very weak diversification

The 3 months correlation between Astrotech and Vontier is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Astrotech Corp and Vontier Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontier Corp and Astrotech Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Astrotech Corp are associated (or correlated) with Vontier Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontier Corp has no effect on the direction of Astrotech Corp i.e., Astrotech Corp and Vontier Corp go up and down completely randomly.

Pair Corralation between Astrotech Corp and Vontier Corp

Given the investment horizon of 90 days Astrotech Corp is expected to under-perform the Vontier Corp. In addition to that, Astrotech Corp is 1.66 times more volatile than Vontier Corp. It trades about -0.04 of its total potential returns per unit of risk. Vontier Corp is currently generating about -0.06 per unit of volatility. If you would invest  3,619  in Vontier Corp on December 29, 2024 and sell it today you would lose (265.00) from holding Vontier Corp or give up 7.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Astrotech Corp  vs.  Vontier Corp

Astrotech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astrotech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vontier Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vontier Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Astrotech Corp and Vontier Corp

The main advantage of trading using opposite Astrotech Corp and Vontier Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astrotech Corp position performs unexpectedly, Vontier Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vontier Corp will offset losses from the drop in Vontier Corp's long position.

The idea behind Astrotech Corp and Vontier Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.