Correlation Between Plexus Corp and Vishay Precision

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

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

Diversification Opportunities for Plexus Corp and Vishay Precision

-0.45

Correlation Coefficient

Plexus Corp  Vishay Precision

Very good diversification

The 3 months correlation between Plexus and Vishay is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Plexus Corp 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 Plexus Corp 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 Plexus Corp i.e., Plexus Corp and Vishay Precision go up and down completely randomly.

Pair Corralation between Plexus Corp and Vishay Precision

Given the investment horizon of 90 days Plexus Corp is expected to generate 0.91 times more return on investment than Vishay Precision. However, Plexus Corp is 1.1 times less risky than Vishay Precision. It trades about 0.18 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.02 per unit of risk. If you would invest  13,239  in Plexus Corp on September 19, 2024 and sell it today you would earn a total of  3,211  from holding Plexus Corp or generate 24.25% return on investment over 90 days.

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

Plexus Corp  vs.  Vishay Precision Group

Plexus Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vishay Precision

Risk-Adjusted Performance

0 of 100

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 Plexus Corp and Vishay Precision

The main advantage of trading using opposite Plexus Corp and Vishay Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plexus Corp 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 Plexus Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.