Correlation Between Vishay Intertechnology and TRAVELERS

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

By analyzing existing cross correlation between Vishay Intertechnology and TRAVELERS INC 405, you can compare the effects of market volatilities on Vishay Intertechnology and TRAVELERS 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 TRAVELERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and TRAVELERS.

Diversification Opportunities for Vishay Intertechnology and TRAVELERS

0.04

Correlation Coefficient

Vishay Intertechnology  TRAVELERS

Significant diversification

The 3 months correlation between Vishay and TRAVELERS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and TRAVELERS INC 405 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVELERS INC 405 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 TRAVELERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVELERS INC 405 has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and TRAVELERS go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and TRAVELERS

Considering the 90-day investment horizon Vishay Intertechnology is expected to under-perform the TRAVELERS. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 1.18 times less risky than TRAVELERS. The stock trades about -0.01 of its potential returns per unit of risk. The TRAVELERS INC 405 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,215  in TRAVELERS INC 405 on October 25, 2024 and sell it today you would earn a total of  575.00  from holding TRAVELERS INC 405 or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	57.63%
Values	Daily Returns

Vishay Intertechnology  vs.  TRAVELERS INC 405

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.

TRAVELERS INC 405

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVELERS INC 405 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TRAVELERS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Intertechnology and TRAVELERS

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

The idea behind Vishay Intertechnology and TRAVELERS INC 405 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.