Correlation Between Vishay Intertechnology and AutoZone

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

By analyzing existing cross correlation between Vishay Intertechnology and AutoZone, you can compare the effects of market volatilities on Vishay Intertechnology and AutoZone 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 Vishay Intertechnology with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and AutoZone.

Diversification Opportunities for Vishay Intertechnology and AutoZone

0.32

Correlation Coefficient

Vishay Intertechnology  AutoZone

Weak diversification

The 3 months correlation between Vishay and AutoZone is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Vishay Intertechnology 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 Vishay Intertechnology are associated (or correlated) with AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and AutoZone go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and AutoZone

Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the AutoZone. In addition to that, Vishay Intertechnology is 1.44 times more volatile than AutoZone. It trades about -0.03 of its total potential returns per unit of risk. AutoZone is currently generating about 0.06 per unit of volatility. If you would invest  242,000  in AutoZone on October 4, 2024 and sell it today you would earn a total of  74,400  from holding AutoZone or generate 30.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

Vishay Intertechnology  vs.  AutoZone

Vishay Intertechnology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AutoZone

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vishay Intertechnology and AutoZone

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

The idea behind Vishay Intertechnology and AutoZone 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.