Correlation Between Fortive Corp and Vishay Precision

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

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

Diversification Opportunities for Fortive Corp and Vishay Precision

0.71

Correlation Coefficient

Fortive Corp  Vishay Precision

Poor diversification

The 3 months correlation between Fortive and Vishay is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Fortive Corp 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 Fortive Corp are associated (or correlated) with Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Fortive Corp i.e., Fortive Corp and Vishay Precision go up and down completely randomly.

Pair Corralation between Fortive Corp and Vishay Precision

Considering the 90-day investment horizon Fortive Corp is expected to under-perform the Vishay Precision. But the stock apears to be less risky and, when comparing its historical volatility, Fortive Corp is 2.41 times less risky than Vishay Precision. The stock trades about -0.17 of its potential returns per unit of risk. The Vishay Precision Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,440  in Vishay Precision Group on March 5, 2024 and sell it today you would lose (63.00) from holding Vishay Precision Group or give up 1.83% of portfolio value over 90 days.

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

Fortive Corp  vs.  Vishay Precision Group

Fortive Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortive Corp and Vishay Precision

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

The idea behind Fortive Corp and Vishay Precision Group 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.