Correlation Between Mesa Laboratories and Vishay Precision

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

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

Diversification Opportunities for Mesa Laboratories and Vishay Precision

0.52

Correlation Coefficient

Mesa Laboratories  Vishay Precision

Very weak diversification

The 3 months correlation between Mesa and Vishay is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Laboratories and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Mesa Laboratories 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 Mesa Laboratories 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 Mesa Laboratories i.e., Mesa Laboratories and Vishay Precision go up and down completely randomly.

Pair Corralation between Mesa Laboratories and Vishay Precision

Given the investment horizon of 90 days Mesa Laboratories is expected to under-perform the Vishay Precision. In addition to that, Mesa Laboratories is 1.17 times more volatile than Vishay Precision Group. It trades about -0.02 of its total potential returns per unit of risk. Vishay Precision Group is currently generating about 0.06 per unit of volatility. If you would invest  2,323  in Vishay Precision Group on December 28, 2024 and sell it today you would earn a total of  154.00  from holding Vishay Precision Group or generate 6.63% return on investment over 90 days.

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

Mesa Laboratories  vs.  Vishay Precision Group

Mesa Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesa Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mesa Laboratories is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Vishay Precision

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Precision Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Vishay Precision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mesa Laboratories and Vishay Precision

The main advantage of trading using opposite Mesa Laboratories and Vishay Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Laboratories 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 Mesa Laboratories 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.