Correlation Between Vishay Intertechnology and Wabash National

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

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

Diversification Opportunities for Vishay Intertechnology and Wabash National

0.16

Correlation Coefficient

Vishay Intertechnology  Wabash National

Average diversification

The 3 months correlation between Vishay and Wabash is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Wabash National go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Wabash National

Considering the 90-day investment horizon Vishay Intertechnology is expected to generate 1.25 times more return on investment than Wabash National. However, Vishay Intertechnology is 1.25 times more volatile than Wabash National. It trades about 0.24 of its potential returns per unit of risk. Wabash National is currently generating about -0.02 per unit of risk. If you would invest  1,515  in Vishay Intertechnology on September 20, 2024 and sell it today you would earn a total of  223.00  from holding Vishay Intertechnology or generate 14.72% return on investment over 90 days.

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

Vishay Intertechnology  vs.  Wabash National

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Wabash National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Wabash National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vishay Intertechnology and Wabash National

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

The idea behind Vishay Intertechnology and Wabash National 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.