65.93 +1.84 (+2.79%) Sell

Profit booking on the minds of VC investors as it manages to marginally outperform broader market

13 min read

VISTEON CORP delivered stellar performance today. It gained +2.79% to close at 65.93. During the last week it lost -10.53% and saw a maximum drawdown of -12.96% before bouncing back.

[Themes containing VC]

Buy-and-Hold investors in VC experienced a maximum drawdown of -40.16% over the last three months. It lost -35.15% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +30.43%.


VC has been underperforming the SP500 index in recent time, after having outperformed till 4 Jan, 2016. Over the last 2 years 11 months and 7 days, VC underperformed the SP500 index on 47% days. Which indicates that on days VC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

VC returned losses on 59% days in the last three months. During this time, it delivered on average -0.64% per day. It delivered it's worst daily return of -7.57%, during this period, on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 28 Sep, 2018. The trend delivered -14.02% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +16.36% to investors.

VC had 4 profitable and 8 loss making months over the last year. During the last year, VC underperformed SP500 index on monthly return basis. VC was also a more risky investment than SP500 index as it's worst month in the last year, Sep 2018, returned -15.84% compared to -7.28% returned by SP500 index in Oct 2018. VC had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from Jul 2018 to Dec 2018) during which period it delivered -61.79%. It is interesting to note that both VC and SP500 index significantly outperform during months when quarterly/annual results are announced.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger

VC is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in VC's volatility from 17 Sep, 2018 to 26 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that VC has significant positive skewness in it's return distribution. This indicates that investors can expect VC to recover from drawdowns quickly. Which makes VC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than VC. Therefore, SP500 must receive a lower allocation than VC in your portfolio. VC usually has shorter drawdown period than the SP500 index.

Based on your interest in VC you may find it interesting to know that APRN and EPIX have both shown remarkable performance and deserve to be on every investors' watchlist.

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