Correlation Between FACT II and Visteon Corp

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

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

Diversification Opportunities for FACT II and Visteon Corp

0.55

Correlation Coefficient

FACT II  Visteon Corp

Very weak diversification

The 3 months correlation between FACT and Visteon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp and FACT II 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 FACT II Acquisition 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 FACT II i.e., FACT II and Visteon Corp go up and down completely randomly.

Pair Corralation between FACT II and Visteon Corp

Assuming the 90 days horizon FACT II is expected to generate 22.91 times less return on investment than Visteon Corp. But when comparing it to its historical volatility, FACT II Acquisition is 2.84 times less risky than Visteon Corp. It trades about 0.04 of its potential returns per unit of risk. Visteon Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  8,571  in Visteon Corp on May 27, 2025 and sell it today you would earn a total of  3,967  from holding Visteon Corp or generate 46.28% return on investment over 90 days.

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

FACT II Acquisition  vs.  Visteon Corp

FACT II Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FACT II is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Visteon Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visteon Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Visteon Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FACT II and Visteon Corp

The main advantage of trading using opposite FACT II and Visteon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FACT II 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 FACT II Acquisition 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.

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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 Stocks Directory module to find actively traded stocks across global markets.