Correlation Between SILICON LABORATOR and Vishay Intertechnology

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

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

Diversification Opportunities for SILICON LABORATOR and Vishay Intertechnology

0.68

Correlation Coefficient

SILICON LABORATOR  Vishay Intertechnology

Poor diversification

The 3 months correlation between SILICON and Vishay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and SILICON LABORATOR 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 SILICON LABORATOR are associated (or correlated) with Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of SILICON LABORATOR i.e., SILICON LABORATOR and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and Vishay Intertechnology

Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 1.22 times more return on investment than Vishay Intertechnology. However, SILICON LABORATOR is 1.22 times more volatile than Vishay Intertechnology. It trades about -0.03 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.04 per unit of risk. If you would invest  12,200  in SILICON LABORATOR on December 24, 2024 and sell it today you would lose (800.00) from holding SILICON LABORATOR or give up 6.56% of portfolio value over 90 days.

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

SILICON LABORATOR  vs.  Vishay Intertechnology

SILICON LABORATOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SILICON LABORATOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SILICON LABORATOR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Vishay Intertechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SILICON LABORATOR and Vishay Intertechnology

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

The idea behind SILICON LABORATOR and Vishay Intertechnology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.