Correlation Between Vishay Precision and Talen Energy
Can any of the company-specific risk be diversified away by investing in both Vishay Precision and Talen Energy 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 Talen Energy 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 Talen Energy, you can compare the effects of market volatilities on Vishay Precision and Talen Energy 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 Talen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Precision and Talen Energy.
Diversification Opportunities for Vishay Precision and Talen Energy
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vishay and Talen is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen Energy 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 Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of Vishay Precision i.e., Vishay Precision and Talen Energy go up and down completely randomly.
Pair Corralation between Vishay Precision and Talen Energy
Considering the 90-day investment horizon Vishay Precision Group is expected to under-perform the Talen Energy. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Precision Group is 1.18 times less risky than Talen Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Talen Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,650 in Talen Energy on October 10, 2024 and sell it today you would earn a total of 16,622 from holding Talen Energy or generate 357.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 81.21% |
Values | Daily Returns |
Vishay Precision Group vs. Talen Energy
Performance |
Timeline |
Vishay Precision |
Talen Energy |
Vishay Precision and Talen Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vishay Precision and Talen Energy
The main advantage of trading using opposite Vishay Precision and Talen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Precision position performs unexpectedly, Talen Energy 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 Talen Energy will offset losses from the drop in Talen Energy's long position.Vishay Precision vs. Spectris plc | Vishay Precision vs. Mesa Laboratories | Vishay Precision vs. ESCO Technologies | Vishay Precision vs. Focus Universal |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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