Correlation Between Mativ Holdings and Sensient Technologies

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Can any of the company-specific risk be diversified away by investing in both Mativ Holdings and Sensient Technologies 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 Mativ Holdings and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mativ Holdings and Sensient Technologies, you can compare the effects of market volatilities on Mativ Holdings and Sensient Technologies 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 Mativ Holdings with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Sensient Technologies.

Diversification Opportunities for Mativ Holdings and Sensient Technologies

MativSensientDiversified AwayMativSensientDiversified Away100%
-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Mativ and Sensient is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Mativ Holdings 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 Mativ Holdings are associated (or correlated) with Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Sensient Technologies go up and down completely randomly.

Pair Corralation between Mativ Holdings and Sensient Technologies

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Sensient Technologies. In addition to that, Mativ Holdings is 2.57 times more volatile than Sensient Technologies. It trades about -0.17 of its total potential returns per unit of risk. Sensient Technologies is currently generating about 0.04 per unit of volatility. If you would invest  7,484  in Sensient Technologies on September 15, 2024 and sell it today you would earn a total of  245.00  from holding Sensient Technologies or generate 3.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mativ Holdings  vs.  Sensient Technologies

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -30-20-10010
JavaScript chart by amCharts 3.21.15MATV SXT
       Timeline  
Mativ Holdings 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1213141516171819
Sensient Technologies 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sensient Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec75767778798081

Mativ Holdings and Sensient Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.29-4.71-3.13-1.55-0.02291.332.74.075.446.81 0.050.100.15
JavaScript chart by amCharts 3.21.15MATV SXT
       Returns  

Pair Trading with Mativ Holdings and Sensient Technologies

The main advantage of trading using opposite Mativ Holdings and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.
The idea behind Mativ Holdings and Sensient Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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