Correlation Between Vishay Intertechnology and AB Volvo

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

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

Diversification Opportunities for Vishay Intertechnology and AB Volvo

0.27

Correlation Coefficient

Vishay Intertechnology  AB Volvo

Modest diversification

The 3 months correlation between Vishay and VOL1 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and AB Volvo go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and AB Volvo

Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the AB Volvo. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 1.4 times less risky than AB Volvo. The stock trades about -0.01 of its potential returns per unit of risk. The AB Volvo is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  753.00  in AB Volvo on October 24, 2024 and sell it today you would earn a total of  1,768  from holding AB Volvo or generate 234.79% return on investment over 90 days.

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

Vishay Intertechnology  vs.  AB Volvo

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.

AB Volvo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AB Volvo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, AB Volvo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vishay Intertechnology and AB Volvo

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

The idea behind Vishay Intertechnology and AB Volvo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.