Correlation Between Vishay Intertechnology and Valero Energy

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

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

Diversification Opportunities for Vishay Intertechnology and Valero Energy

-0.26

Correlation Coefficient

Vishay Intertechnology  Valero Energy

Very good diversification

The 3 months correlation between Vishay and Valero is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Valero Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy Corp 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy Corp has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Valero Energy go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Valero Energy

Assuming the 90 days trading horizon Vishay Intertechnology is expected to generate 0.95 times more return on investment than Valero Energy. However, Vishay Intertechnology is 1.05 times less risky than Valero Energy. It trades about -0.11 of its potential returns per unit of risk. Valero Energy Corp is currently generating about -0.15 per unit of risk. If you would invest  1,697  in Vishay Intertechnology on October 11, 2024 and sell it today you would lose (63.00) from holding Vishay Intertechnology or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Vishay Intertechnology  vs.  Valero Energy Corp

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Valero Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valero Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vishay Intertechnology and Valero Energy

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

The idea behind Vishay Intertechnology and Valero Energy Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.