Correlation Between Vishay Precision and KINDER

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

Diversification Opportunities for Vishay Precision and KINDER

0.21

Correlation Coefficient

Vishay Precision  KINDER

Modest diversification

The 3 months correlation between Vishay and KINDER is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Vishay Precision i.e., Vishay Precision and KINDER go up and down completely randomly.

Pair Corralation between Vishay Precision and KINDER

Considering the 90-day investment horizon Vishay Precision Group is expected to under-perform the KINDER. In addition to that, Vishay Precision is 3.29 times more volatile than KINDER MORGAN ENERGY. It trades about -0.07 of its total potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.0 per unit of volatility. If you would invest  10,845  in KINDER MORGAN ENERGY on December 11, 2024 and sell it today you would lose (153.00) from holding KINDER MORGAN ENERGY or give up 1.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.88%
Values	Daily Returns

Vishay Precision Group  vs.  KINDER MORGAN ENERGY

Vishay Precision

Risk-Adjusted Performance

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vishay Precision and KINDER

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

The idea behind Vishay Precision Group and KINDER MORGAN ENERGY 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.