Correlation Between Codexis and Visteon Corp

Can any of the company-specific risk be diversified away by investing in both Codexis and Visteon 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 Codexis and Visteon Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Codexis and Visteon Corp, you can compare the effects of market volatilities on Codexis and Visteon 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 Codexis with a short position of Visteon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codexis and Visteon Corp.

Diversification Opportunities for Codexis and Visteon Corp

-0.01

Correlation Coefficient

Codexis  Visteon Corp

Good diversification

The 3 months correlation between Codexis and Visteon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Codexis and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp and Codexis 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 Codexis are associated (or correlated) with Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of Codexis i.e., Codexis and Visteon Corp go up and down completely randomly.

Pair Corralation between Codexis and Visteon Corp

Given the investment horizon of 90 days Codexis is expected to generate 2.07 times more return on investment than Visteon Corp. However, Codexis is 2.07 times more volatile than Visteon Corp. It trades about 0.42 of its potential returns per unit of risk. Visteon Corp is currently generating about 0.0 per unit of risk. If you would invest  393.00  in Codexis on September 19, 2024 and sell it today you would earn a total of  168.00  from holding Codexis or generate 42.75% return on investment over 90 days.

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

Codexis  vs.  Visteon Corp

Codexis

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Visteon Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Codexis and Visteon Corp

The main advantage of trading using opposite Codexis and Visteon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codexis position performs unexpectedly, Visteon 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 Visteon Corp will offset losses from the drop in Visteon Corp's long position.

The idea behind Codexis and Visteon 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.