Correlation Between Vishay Intertechnology and NiSource

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

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

Diversification Opportunities for Vishay Intertechnology and NiSource

0.03

Correlation Coefficient

Vishay Intertechnology  NiSource

Significant diversification

The 3 months correlation between Vishay and NiSource is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and NiSource go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and NiSource

Assuming the 90 days trading horizon Vishay Intertechnology is expected to generate 1.72 times less return on investment than NiSource. In addition to that, Vishay Intertechnology is 2.52 times more volatile than NiSource. It trades about 0.05 of its total potential returns per unit of risk. NiSource is currently generating about 0.2 per unit of volatility. If you would invest  3,055  in NiSource on September 14, 2024 and sell it today you would earn a total of  425.00  from holding NiSource or generate 13.91% 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.  NiSource

Vishay Intertechnology

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vishay Intertechnology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NiSource

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NiSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Intertechnology and NiSource

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

The idea behind Vishay Intertechnology and NiSource 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.