Correlation Between Vontier Corp and Cepton

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

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

Diversification Opportunities for Vontier Corp and Cepton

-0.08

Correlation Coefficient

Vontier Corp  Cepton

Good diversification

The 3 months correlation between Vontier and Cepton is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc and Vontier 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 Vontier Corp are associated (or correlated) with Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Vontier Corp i.e., Vontier Corp and Cepton go up and down completely randomly.

Pair Corralation between Vontier Corp and Cepton

Considering the 90-day investment horizon Vontier Corp is expected to generate 3.09 times more return on investment than Cepton. However, Vontier Corp is 3.09 times more volatile than Cepton Inc. It trades about 0.05 of its potential returns per unit of risk. Cepton Inc is currently generating about 0.09 per unit of risk. If you would invest  3,433  in Vontier Corp on October 13, 2024 and sell it today you would earn a total of  164.00  from holding Vontier Corp or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Vontier Corp  vs.  Cepton Inc

Vontier Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vontier Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vontier Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Cepton Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cepton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vontier Corp and Cepton

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

The idea behind Vontier Corp and Cepton Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.