Correlation Between Vishay Intertechnology and Luxfer Holdings

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

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

Diversification Opportunities for Vishay Intertechnology and Luxfer Holdings

-0.49

Correlation Coefficient

Vishay Intertechnology  Luxfer Holdings

Very good diversification

The 3 months correlation between Vishay and Luxfer is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC 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 Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Luxfer Holdings

Considering the 90-day investment horizon Vishay Intertechnology is expected to generate 1.63 times more return on investment than Luxfer Holdings. However, Vishay Intertechnology is 1.63 times more volatile than Luxfer Holdings PLC. It trades about 0.13 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.03 per unit of risk. If you would invest  1,702  in Vishay Intertechnology on September 5, 2024 and sell it today you would earn a total of  147.00  from holding Vishay Intertechnology or generate 8.64% return on investment over 90 days.

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

Vishay Intertechnology  vs.  Luxfer Holdings PLC

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.

Luxfer Holdings PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Intertechnology and Luxfer Holdings

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

The idea behind Vishay Intertechnology and Luxfer Holdings PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.