Correlation Between Vishay Precision and Electro Sensors

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

By analyzing existing cross correlation between Vishay Precision Group and Electro Sensors, you can compare the effects of market volatilities on Vishay Precision and Electro Sensors 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 Precision with a short position of Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Precision and Electro Sensors.

Diversification Opportunities for Vishay Precision and Electro Sensors

0.01

Correlation Coefficient

Vishay Precision  Electro Sensors

Significant diversification

The 3 months correlation between Vishay and Electro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and Vishay Precision 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 Precision Group are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Vishay Precision i.e., Vishay Precision and Electro Sensors go up and down completely randomly.

Pair Corralation between Vishay Precision and Electro Sensors

Considering the 90-day investment horizon Vishay Precision Group is expected to generate 0.98 times more return on investment than Electro Sensors. However, Vishay Precision Group is 1.02 times less risky than Electro Sensors. It trades about 0.06 of its potential returns per unit of risk. Electro Sensors is currently generating about -0.12 per unit of risk. If you would invest  2,323  in Vishay Precision Group on December 29, 2024 and sell it today you would earn a total of  154.00  from holding Vishay Precision Group or generate 6.63% return on investment over 90 days.

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

Vishay Precision Group  vs.  Electro Sensors

Vishay Precision

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Precision Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vishay Precision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Electro Sensors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electro Sensors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vishay Precision and Electro Sensors

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

The idea behind Vishay Precision Group and Electro Sensors 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.