Correlation Between Visteon Corp and Avient Corp

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

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

Diversification Opportunities for Visteon Corp and Avient Corp

0.25

Correlation Coefficient

Visteon Corp  Avient Corp

Modest diversification

The 3 months correlation between Visteon and Avient is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and Visteon 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 Visteon Corp are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Visteon Corp i.e., Visteon Corp and Avient Corp go up and down completely randomly.

Pair Corralation between Visteon Corp and Avient Corp

Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 1.57 times more return on investment than Avient Corp. However, Visteon Corp is 1.57 times more volatile than Avient Corp. It trades about 0.02 of its potential returns per unit of risk. Avient Corp is currently generating about -0.26 per unit of risk. If you would invest  9,002  in Visteon Corp on September 17, 2024 and sell it today you would earn a total of  44.00  from holding Visteon Corp or generate 0.49% return on investment over 90 days.

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

Visteon Corp  vs.  Avient Corp

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Visteon Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Avient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Visteon Corp and Avient Corp

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

The idea behind Visteon Corp and Avient 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 Stocks Directory module to find actively traded stocks across global markets.