Correlation Between Garmin and Vishay Precision

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

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

Diversification Opportunities for Garmin and Vishay Precision

0.38

Correlation Coefficient

Garmin  Vishay Precision

Weak diversification

The 3 months correlation between Garmin and Vishay is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Garmin 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 Garmin are associated (or correlated) with Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Garmin i.e., Garmin and Vishay Precision go up and down completely randomly.

Pair Corralation between Garmin and Vishay Precision

Given the investment horizon of 90 days Garmin is expected to generate 0.92 times more return on investment than Vishay Precision. However, Garmin is 1.08 times less risky than Vishay Precision. It trades about 0.01 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.01 per unit of risk. If you would invest  20,824  in Garmin on December 20, 2024 and sell it today you would earn a total of  53.00  from holding Garmin or generate 0.25% return on investment over 90 days.

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

Garmin  vs.  Vishay Precision Group

Garmin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garmin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Garmin is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Vishay Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Garmin and Vishay Precision

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

The idea behind Garmin and Vishay Precision Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.