Correlation Between Visteon Corp and International Consolidated

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

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

Diversification Opportunities for Visteon Corp and International Consolidated

-0.5

Correlation Coefficient

Visteon Corp  International Consolidated

Very good diversification

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

Pair Corralation between Visteon Corp and International Consolidated

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the International Consolidated. In addition to that, Visteon Corp is 1.14 times more volatile than International Consolidated Airlines. It trades about -0.1 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.33 per unit of volatility. If you would invest  411.00  in International Consolidated Airlines on October 25, 2024 and sell it today you would earn a total of  398.00  from holding International Consolidated Airlines or generate 96.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Visteon Corp  vs.  International Consolidated Air

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 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.

International Consolidated

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, International Consolidated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visteon Corp and International Consolidated

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

The idea behind Visteon Corp and International Consolidated Airlines 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.