Correlation Between Visteon Corp and 126408GW7

Can any of the company-specific risk be diversified away by investing in both Visteon Corp and 126408GW7 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 126408GW7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visteon Corp and CSX P 475, you can compare the effects of market volatilities on Visteon Corp and 126408GW7 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 126408GW7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and 126408GW7.

Diversification Opportunities for Visteon Corp and 126408GW7

0.46

Correlation Coefficient

Visteon Corp  126408GW7

Very weak diversification

The 3 months correlation between Visteon and 126408GW7 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and CSX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 475 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 126408GW7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 475 has no effect on the direction of Visteon Corp i.e., Visteon Corp and 126408GW7 go up and down completely randomly.

Pair Corralation between Visteon Corp and 126408GW7

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the 126408GW7. But the stock apears to be less risky and, when comparing its historical volatility, Visteon Corp is 49.31 times less risky than 126408GW7. The stock trades about -0.05 of its potential returns per unit of risk. The CSX P 475 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,581  in CSX P 475 on October 26, 2024 and sell it today you would lose (495.00) from holding CSX P 475 or give up 5.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	64.78%
Values	Daily Returns

Visteon Corp  vs.  CSX P 475

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.

CSX P 475

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSX P 475 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 126408GW7 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visteon Corp and 126408GW7

The main advantage of trading using opposite Visteon Corp and 126408GW7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp position performs unexpectedly, 126408GW7 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 126408GW7 will offset losses from the drop in 126408GW7's long position.

The idea behind Visteon Corp and CSX P 475 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.