Correlation Between Visteon Corp and Viemed Healthcare

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

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

Diversification Opportunities for Visteon Corp and Viemed Healthcare

0.29

Correlation Coefficient

Visteon Corp  Viemed Healthcare

Modest diversification

The 3 months correlation between Visteon and Viemed is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Visteon Corp i.e., Visteon Corp and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Visteon Corp and Viemed Healthcare

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the Viemed Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Visteon Corp is 1.33 times less risky than Viemed Healthcare. The stock trades about -0.05 of its potential returns per unit of risk. The Viemed Healthcare is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  793.00  in Viemed Healthcare on October 6, 2024 and sell it today you would earn a total of  19.00  from holding Viemed Healthcare or generate 2.4% 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.  Viemed Healthcare

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.

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Visteon Corp and Viemed Healthcare

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

The idea behind Visteon Corp and Viemed Healthcare 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.