Correlation Between Pool and Vishay Intertechnology

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

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

Diversification Opportunities for Pool and Vishay Intertechnology

0.17

Correlation Coefficient

Pool  Vishay Intertechnology

Average diversification

The 3 months correlation between Pool and Vishay is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and Pool 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 Pool Corporation 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 Pool i.e., Pool and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Pool and Vishay Intertechnology

Given the investment horizon of 90 days Pool Corporation is expected to under-perform the Vishay Intertechnology. But the stock apears to be less risky and, when comparing its historical volatility, Pool Corporation is 1.57 times less risky than Vishay Intertechnology. The stock trades about -0.04 of its potential returns per unit of risk. The Vishay Intertechnology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,674  in Vishay Intertechnology on December 28, 2024 and sell it today you would lose (11.00) from holding Vishay Intertechnology or give up 0.66% of portfolio value over 90 days.

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

Pool Corp.  vs.  Vishay Intertechnology

Pool

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional 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. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pool and Vishay Intertechnology

The main advantage of trading using opposite Pool and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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 Pool Corporation 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.