Correlation Between Dentsply Sirona and Dassault Systèmes

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

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

Diversification Opportunities for Dentsply Sirona and Dassault Systèmes

-0.38

Correlation Coefficient

Dentsply Sirona  Dassault Systèmes

Very good diversification

The 3 months correlation between Dentsply and Dassault is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Dassault Systmes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systèmes 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 Dassault Systèmes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systèmes has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Dassault Systèmes go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Dassault Systèmes

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the Dassault Systèmes. In addition to that, Dentsply Sirona is 1.11 times more volatile than Dassault Systmes SE. It trades about -0.18 of its total potential returns per unit of risk. Dassault Systmes SE is currently generating about 0.15 per unit of volatility. If you would invest  3,300  in Dassault Systmes SE on December 23, 2024 and sell it today you would earn a total of  560.00  from holding Dassault Systmes SE or generate 16.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dentsply Sirona  vs.  Dassault Systmes SE

Dentsply Sirona

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dassault Systèmes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systmes SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dassault Systèmes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and Dassault Systèmes

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

The idea behind Dentsply Sirona and Dassault Systmes SE 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.