Correlation Between Visteon Corp and Fox Factory

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

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

Diversification Opportunities for Visteon Corp and Fox Factory

0.5

Correlation Coefficient

Visteon Corp  Fox Factory

Very weak diversification

The 3 months correlation between Visteon and Fox is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding 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 Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Visteon Corp i.e., Visteon Corp and Fox Factory go up and down completely randomly.

Pair Corralation between Visteon Corp and Fox Factory

Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 0.78 times more return on investment than Fox Factory. However, Visteon Corp is 1.29 times less risky than Fox Factory. It trades about -0.09 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.08 per unit of risk. If you would invest  8,933  in Visteon Corp on December 27, 2024 and sell it today you would lose (951.00) from holding Visteon Corp or give up 10.65% of portfolio value over 90 days.

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

Visteon Corp  vs.  Fox Factory Holding

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 latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fox Factory Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Visteon Corp and Fox Factory

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

The idea behind Visteon Corp and Fox Factory Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.