Correlation Between Sensient Technologies and JPMORGAN

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

By analyzing existing cross correlation between Sensient Technologies and JPMORGAN CHASE 5625, you can compare the effects of market volatilities on Sensient Technologies and JPMORGAN 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 JPMORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and JPMORGAN.

Diversification Opportunities for Sensient Technologies and JPMORGAN

-0.42

Correlation Coefficient

Sensient Technologies  JPMORGAN

Very good diversification

The 3 months correlation between Sensient and JPMORGAN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and JPMORGAN CHASE 5625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMORGAN CHASE 5625 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 JPMORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMORGAN CHASE 5625 has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and JPMORGAN go up and down completely randomly.

Pair Corralation between Sensient Technologies and JPMORGAN

Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.78 times more return on investment than JPMORGAN. However, Sensient Technologies is 1.28 times less risky than JPMORGAN. It trades about 0.05 of its potential returns per unit of risk. JPMORGAN CHASE 5625 is currently generating about -0.02 per unit of risk. If you would invest  7,515  in Sensient Technologies on September 4, 2024 and sell it today you would earn a total of  330.00  from holding Sensient Technologies or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Sensient Technologies  vs.  JPMORGAN CHASE 5625

Sensient Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 4 (%) 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.

JPMORGAN CHASE 5625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMORGAN CHASE 5625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMORGAN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sensient Technologies and JPMORGAN

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

The idea behind Sensient Technologies and JPMORGAN CHASE 5625 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.