Correlation Between Fluent and Visteon Corp

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

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

Diversification Opportunities for Fluent and Visteon Corp

0.2

Correlation Coefficient

Fluent  Visteon Corp

Modest diversification

The 3 months correlation between Fluent and Visteon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp and Fluent 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 Fluent Inc are associated (or correlated) with Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of Fluent i.e., Fluent and Visteon Corp go up and down completely randomly.

Pair Corralation between Fluent and Visteon Corp

Given the investment horizon of 90 days Fluent Inc is expected to generate 2.31 times more return on investment than Visteon Corp. However, Fluent is 2.31 times more volatile than Visteon Corp. It trades about 0.03 of its potential returns per unit of risk. Visteon Corp is currently generating about 0.03 per unit of risk. If you would invest  274.00  in Fluent Inc on September 16, 2024 and sell it today you would earn a total of  8.00  from holding Fluent Inc or generate 2.92% return on investment over 90 days.

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

Fluent Inc  vs.  Visteon Corp

Fluent Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluent Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fluent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Visteon Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visteon Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Visteon Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fluent and Visteon Corp

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

The idea behind Fluent Inc and Visteon Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.