Correlation Between Lear and Visteon Corp

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

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

Diversification Opportunities for Lear and Visteon Corp

0.98

Correlation Coefficient

Lear  Visteon Corp

Almost no diversification

The 3 months correlation between Lear and Visteon is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp and Lear 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 Lear Corporation 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 Lear i.e., Lear and Visteon Corp go up and down completely randomly.

Pair Corralation between Lear and Visteon Corp

Considering the 90-day investment horizon Lear is expected to generate 1.4 times less return on investment than Visteon Corp. But when comparing it to its historical volatility, Lear Corporation is 1.08 times less risky than Visteon Corp. It trades about 0.23 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  7,899  in Visteon Corp on April 25, 2025 and sell it today you would earn a total of  3,519  from holding Visteon Corp or generate 44.55% return on investment over 90 days.

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

Lear Corp.  vs.  Visteon Corp

Lear

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lear Corporation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Lear sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Lear and Visteon Corp

The main advantage of trading using opposite Lear and Visteon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lear 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 Lear Corporation 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 CEOs Directory module to screen CEOs from public companies around the world.