Correlation Between Vishay Intertechnology and GOODYEAR T

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

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

Diversification Opportunities for Vishay Intertechnology and GOODYEAR T

0.55

Correlation Coefficient

Vishay Intertechnology  GOODYEAR T

Very weak diversification

The 3 months correlation between Vishay and GOODYEAR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and GOODYEAR T go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and GOODYEAR T

Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the GOODYEAR T. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 1.67 times less risky than GOODYEAR T. The stock trades about -0.04 of its potential returns per unit of risk. The GOODYEAR T RUBBER is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  832.00  in GOODYEAR T RUBBER on December 30, 2024 and sell it today you would lose (30.00) from holding GOODYEAR T RUBBER or give up 3.61% of portfolio value over 90 days.

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

Vishay Intertechnology  vs.  GOODYEAR T RUBBER

Vishay Intertechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GOODYEAR T RUBBER

Risk-Adjusted Performance

Very Weak

Over the last 90 days GOODYEAR T RUBBER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GOODYEAR T is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vishay Intertechnology and GOODYEAR T

The main advantage of trading using opposite Vishay Intertechnology and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Intertechnology position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.

The idea behind Vishay Intertechnology and GOODYEAR T RUBBER 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 Transaction History module to view history of all your transactions and understand their impact on performance.