Correlation Between Dentsply Sirona and Flow Traders

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

By analyzing existing cross correlation between Dentsply Sirona and Flow Traders NV, you can compare the effects of market volatilities on Dentsply Sirona and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Flow Traders.

Diversification Opportunities for Dentsply Sirona and Flow Traders

-0.63

Correlation Coefficient

Dentsply Sirona  Flow Traders

Excellent diversification

The 3 months correlation between Dentsply and Flow is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Flow Traders go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Flow Traders

Assuming the 90 days trading horizon Dentsply Sirona is expected to under-perform the Flow Traders. In addition to that, Dentsply Sirona is 2.64 times more volatile than Flow Traders NV. It trades about -0.09 of its total potential returns per unit of risk. Flow Traders NV is currently generating about 0.23 per unit of volatility. If you would invest  1,811  in Flow Traders NV on September 18, 2024 and sell it today you would earn a total of  433.00  from holding Flow Traders NV or generate 23.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Dentsply Sirona  vs.  Flow Traders NV

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.

Flow Traders NV

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and Flow Traders

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

The idea behind Dentsply Sirona and Flow Traders NV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..