Correlation Between Vishay Intertechnology and Transocean

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

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

Diversification Opportunities for Vishay Intertechnology and Transocean

-0.01

Correlation Coefficient

Vishay Intertechnology  Transocean

Good diversification

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

Pair Corralation between Vishay Intertechnology and Transocean

Considering the 90-day investment horizon Vishay Intertechnology is expected to under-perform the Transocean. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 1.6 times less risky than Transocean. The stock trades about -0.34 of its potential returns per unit of risk. The Transocean is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  426.00  in Transocean on October 5, 2024 and sell it today you would lose (31.00) from holding Transocean or give up 7.28% of portfolio value over 90 days.

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

Vishay Intertechnology  vs.  Transocean

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vishay Intertechnology and Transocean

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

The idea behind Vishay Intertechnology and Transocean 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.