Correlation Between DENTSPLY SIRONA and Richardson Electronics

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

By analyzing existing cross correlation between DENTSPLY SIRONA and Richardson Electronics, you can compare the effects of market volatilities on DENTSPLY SIRONA and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENTSPLY SIRONA and Richardson Electronics.

Diversification Opportunities for DENTSPLY SIRONA and Richardson Electronics

0.76

Correlation Coefficient

DENTSPLY SIRONA  Richardson Electronics

Poor diversification

The 3 months correlation between DENTSPLY and Richardson is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding DENTSPLY SIRONA and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of DENTSPLY SIRONA i.e., DENTSPLY SIRONA and Richardson Electronics go up and down completely randomly.

Pair Corralation between DENTSPLY SIRONA and Richardson Electronics

Assuming the 90 days trading horizon DENTSPLY SIRONA is expected to under-perform the Richardson Electronics. But the stock apears to be less risky and, when comparing its historical volatility, DENTSPLY SIRONA is 1.05 times less risky than Richardson Electronics. The stock trades about -0.18 of its potential returns per unit of risk. The Richardson Electronics is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,312  in Richardson Electronics on December 25, 2024 and sell it today you would lose (214.00) from holding Richardson Electronics or give up 16.31% of portfolio value over 90 days.

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

DENTSPLY SIRONA  vs.  Richardson Electronics

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Richardson Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richardson Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Pair Trading with DENTSPLY SIRONA and Richardson Electronics

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

The idea behind DENTSPLY SIRONA and Richardson Electronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..