Correlation Between Sensient Technologies and 049560AY1

Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and 049560AY1 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 Sensient Technologies and 049560AY1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sensient Technologies and ATO 575 15 OCT 52, you can compare the effects of market volatilities on Sensient Technologies and 049560AY1 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 Sensient Technologies with a short position of 049560AY1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and 049560AY1.

Diversification Opportunities for Sensient Technologies and 049560AY1

0.13

Correlation Coefficient

Sensient Technologies  049560AY1

Average diversification

The 3 months correlation between Sensient and 049560AY1 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and ATO 575 15 OCT 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATO 575 15 and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with 049560AY1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATO 575 15 has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and 049560AY1 go up and down completely randomly.

Pair Corralation between Sensient Technologies and 049560AY1

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the 049560AY1. In addition to that, Sensient Technologies is 1.28 times more volatile than ATO 575 15 OCT 52. It trades about -0.08 of its total potential returns per unit of risk. ATO 575 15 OCT 52 is currently generating about -0.09 per unit of volatility. If you would invest  10,983  in ATO 575 15 OCT 52 on September 27, 2024 and sell it today you would lose (455.00) from holding ATO 575 15 OCT 52 or give up 4.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.94%
Values	Daily Returns

Sensient Technologies  vs.  ATO 575 15 OCT 52

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ATO 575 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATO 575 15 OCT 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ATO 575 15 OCT 52 investors.

Pair Trading with Sensient Technologies and 049560AY1

The main advantage of trading using opposite Sensient Technologies and 049560AY1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, 049560AY1 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 049560AY1 will offset losses from the drop in 049560AY1's long position.

The idea behind Sensient Technologies and ATO 575 15 OCT 52 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.