Correlation Between Dentsply Sirona and Baker Steel

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

By analyzing existing cross correlation between Dentsply Sirona and Baker Steel Resources, you can compare the effects of market volatilities on Dentsply Sirona and Baker Steel 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 Dentsply Sirona with a short position of Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Baker Steel.

Diversification Opportunities for Dentsply Sirona and Baker Steel

-0.64

Correlation Coefficient

Dentsply Sirona  Baker Steel

Excellent diversification

The 3 months correlation between Dentsply and Baker is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Baker Steel go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Baker Steel

Assuming the 90 days trading horizon Dentsply Sirona is expected to under-perform the Baker Steel. In addition to that, Dentsply Sirona is 1.82 times more volatile than Baker Steel Resources. It trades about -0.08 of its total potential returns per unit of risk. Baker Steel Resources is currently generating about 0.12 per unit of volatility. If you would invest  4,950  in Baker Steel Resources on September 3, 2024 and sell it today you would earn a total of  850.00  from holding Baker Steel Resources or generate 17.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Dentsply Sirona  vs.  Baker Steel Resources

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Baker Steel Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Steel Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baker Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and Baker Steel

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

The idea behind Dentsply Sirona and Baker Steel Resources 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.