Correlation Between Vishay Precision and SunOpta

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

Diversification Opportunities for Vishay Precision and SunOpta

-0.44

Correlation Coefficient

Vishay Precision  SunOpta

Very good diversification

The 3 months correlation between Vishay and SunOpta is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Vishay Precision i.e., Vishay Precision and SunOpta go up and down completely randomly.

Pair Corralation between Vishay Precision and SunOpta

Considering the 90-day investment horizon Vishay Precision Group is expected to generate 1.11 times more return on investment than SunOpta. However, Vishay Precision is 1.11 times more volatile than SunOpta. It trades about 0.13 of its potential returns per unit of risk. SunOpta is currently generating about -0.03 per unit of risk. If you would invest  2,209  in Vishay Precision Group on September 23, 2024 and sell it today you would earn a total of  106.00  from holding Vishay Precision Group or generate 4.8% return on investment over 90 days.

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

Vishay Precision Group  vs.  SunOpta

Vishay Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SunOpta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Precision and SunOpta

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

The idea behind Vishay Precision Group and SunOpta 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.