Correlation Between Corning Incorporated and Vicor

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

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

Diversification Opportunities for Corning Incorporated and Vicor

0.87

Correlation Coefficient

Corning Incorporated  Vicor

Very poor diversification

The 3 months correlation between Corning and Vicor is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and Vicor go up and down completely randomly.

Pair Corralation between Corning Incorporated and Vicor

Considering the 90-day investment horizon Corning Incorporated is expected to generate 3.7 times less return on investment than Vicor. But when comparing it to its historical volatility, Corning Incorporated is 2.74 times less risky than Vicor. It trades about 0.13 of its potential returns per unit of risk. Vicor is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,689  in Vicor on September 17, 2024 and sell it today you would earn a total of  1,766  from holding Vicor or generate 47.87% return on investment over 90 days.

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

Corning Incorporated  vs.  Vicor

Corning Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vicor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vicor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Vicor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and Vicor

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

The idea behind Corning Incorporated and Vicor 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.