Correlation Between Sono Tek and Vontier Corp

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

By analyzing existing cross correlation between Sono Tek Corp and Vontier Corp, you can compare the effects of market volatilities on Sono Tek and Vontier Corp 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 Sono Tek with a short position of Vontier Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Vontier Corp.

Diversification Opportunities for Sono Tek and Vontier Corp

0.34

Correlation Coefficient

Sono Tek  Vontier Corp

Weak diversification

The 3 months correlation between Sono and Vontier is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Vontier Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontier Corp and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Vontier Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontier Corp has no effect on the direction of Sono Tek i.e., Sono Tek and Vontier Corp go up and down completely randomly.

Pair Corralation between Sono Tek and Vontier Corp

Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Vontier Corp. In addition to that, Sono Tek is 2.21 times more volatile than Vontier Corp. It trades about -0.1 of its total potential returns per unit of risk. Vontier Corp is currently generating about -0.05 per unit of volatility. If you would invest  3,931  in Vontier Corp on December 2, 2024 and sell it today you would lose (196.00) from holding Vontier Corp or give up 4.99% of portfolio value over 90 days.

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

Sono Tek Corp  vs.  Vontier Corp

Sono Tek Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sono Tek Corp 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Vontier Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vontier Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vontier Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sono Tek and Vontier Corp

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

The idea behind Sono Tek Corp and Vontier Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.