Correlation Between MKS Instruments and Vontier Corp

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

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

Diversification Opportunities for MKS Instruments and Vontier Corp

0.8

Correlation Coefficient

MKS Instruments  Vontier Corp

Very poor diversification

The 3 months correlation between MKS and Vontier is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Vontier Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontier Corp and MKS Instruments 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 MKS Instruments 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 MKS Instruments i.e., MKS Instruments and Vontier Corp go up and down completely randomly.

Pair Corralation between MKS Instruments and Vontier Corp

Given the investment horizon of 90 days MKS Instruments is expected to under-perform the Vontier Corp. In addition to that, MKS Instruments is 1.74 times more volatile than Vontier Corp. It trades about -0.09 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 28, 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	Strong
Accuracy	100.0%
Values	Daily Returns

MKS Instruments  vs.  Vontier Corp

MKS Instruments

Risk-Adjusted Performance

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unsteady 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 MKS Instruments and Vontier Corp

The main advantage of trading using opposite MKS Instruments and Vontier Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKS Instruments 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 MKS Instruments 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.