Correlation Between Vishay Precision and Novanta

Can any of the company-specific risk be diversified away by investing in both Vishay Precision and Novanta 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 Novanta 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 Novanta, you can compare the effects of market volatilities on Vishay Precision and Novanta 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 Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Precision and Novanta.

Diversification Opportunities for Vishay Precision and Novanta

0.07

Correlation Coefficient

Vishay Precision  Novanta

Significant diversification

The 3 months correlation between Vishay and Novanta is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta 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 Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of Vishay Precision i.e., Vishay Precision and Novanta go up and down completely randomly.

Pair Corralation between Vishay Precision and Novanta

Considering the 90-day investment horizon Vishay Precision Group is expected to generate 1.49 times more return on investment than Novanta. However, Vishay Precision is 1.49 times more volatile than Novanta. It trades about 0.06 of its potential returns per unit of risk. Novanta is currently generating about -0.16 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.  Novanta

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.

Novanta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novanta 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vishay Precision and Novanta

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

The idea behind Vishay Precision Group and Novanta 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.