Correlation Between Visteon Corp and Cooper Stnd

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

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

Diversification Opportunities for Visteon Corp and Cooper Stnd

0.24

Correlation Coefficient

Visteon Corp  Cooper Stnd

Modest diversification

The 3 months correlation between Visteon and Cooper is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd 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 Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Visteon Corp i.e., Visteon Corp and Cooper Stnd go up and down completely randomly.

Pair Corralation between Visteon Corp and Cooper Stnd

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the Cooper Stnd. But the stock apears to be less risky and, when comparing its historical volatility, Visteon Corp is 2.19 times less risky than Cooper Stnd. The stock trades about -0.05 of its potential returns per unit of risk. The Cooper Stnd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,332  in Cooper Stnd on December 20, 2024 and sell it today you would earn a total of  134.00  from holding Cooper Stnd or generate 10.06% 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.  Cooper Stnd

Visteon Corp

Risk-Adjusted Performance

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.

Cooper Stnd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cooper Stnd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cooper Stnd unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visteon Corp and Cooper Stnd

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

The idea behind Visteon Corp and Cooper Stnd 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.