Correlation Between Western Asset and Vishay Intertechnology

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

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

Diversification Opportunities for Western Asset and Vishay Intertechnology

0.52

Correlation Coefficient

Western Asset  Vishay Intertechnology

Very weak diversification

The 3 months correlation between Western and Vishay is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and Western Asset 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 Western Asset Investment are associated (or correlated) with Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Western Asset i.e., Western Asset and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Western Asset and Vishay Intertechnology

Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Vishay Intertechnology. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 3.18 times less risky than Vishay Intertechnology. The stock trades about -0.23 of its potential returns per unit of risk. The Vishay Intertechnology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,215  in Vishay Intertechnology on January 26, 2024 and sell it today you would earn a total of  13.00  from holding Vishay Intertechnology or generate 0.59% return on investment over 90 days.

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

Western Asset Investment  vs.  Vishay Intertechnology

Western Asset Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Vishay Intertechnology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Western Asset and Vishay Intertechnology

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

The idea behind Western Asset Investment and Vishay Intertechnology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.