Correlation Between Marfrig Global and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Sensient Technologies 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 Marfrig Global and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Sensient Technologies, you can compare the effects of market volatilities on Marfrig Global and Sensient Technologies 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 Marfrig Global with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Sensient Technologies.
Diversification Opportunities for Marfrig Global and Sensient Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Marfrig and Sensient is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Marfrig Global i.e., Marfrig Global and Sensient Technologies go up and down completely randomly.
Pair Corralation between Marfrig Global and Sensient Technologies
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.97 times more return on investment than Sensient Technologies. However, Marfrig Global is 1.97 times more volatile than Sensient Technologies. It trades about 0.05 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.01 per unit of risk. If you would invest 162.00 in Marfrig Global Foods on October 12, 2024 and sell it today you would earn a total of 112.00 from holding Marfrig Global Foods or generate 69.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Marfrig Global Foods vs. Sensient Technologies
Performance |
Timeline |
Marfrig Global Foods |
Sensient Technologies |
Marfrig Global and Sensient Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marfrig Global and Sensient Technologies
The main advantage of trading using opposite Marfrig Global and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods Corp |
Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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