Correlation Between Vontier Corp and Microvision

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

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

Diversification Opportunities for Vontier Corp and Microvision

-0.77

Correlation Coefficient

Vontier Corp  Microvision

Pay attention - limited upside

The 3 months correlation between Vontier and Microvision is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Microvision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvision 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 Microvision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvision has no effect on the direction of Vontier Corp i.e., Vontier Corp and Microvision go up and down completely randomly.

Pair Corralation between Vontier Corp and Microvision

Considering the 90-day investment horizon Vontier Corp is expected to generate 0.31 times more return on investment than Microvision. However, Vontier Corp is 3.21 times less risky than Microvision. It trades about 0.08 of its potential returns per unit of risk. Microvision is currently generating about 0.01 per unit of risk. If you would invest  2,075  in Vontier Corp on September 27, 2024 and sell it today you would earn a total of  1,650  from holding Vontier Corp or generate 79.52% return on investment over 90 days.

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

Vontier Corp  vs.  Microvision

Vontier Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vontier Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vontier Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Microvision

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vontier Corp and Microvision

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

The idea behind Vontier Corp and Microvision 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.