Correlation Between Sensient Technologies and Artisan Partners

Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Artisan Partners 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 Sensient Technologies and Artisan Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sensient Technologies and Artisan Partners Asset, you can compare the effects of market volatilities on Sensient Technologies and Artisan Partners 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 Sensient Technologies with a short position of Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Artisan Partners.

Diversification Opportunities for Sensient Technologies and Artisan Partners

0.76

Correlation Coefficient

Sensient Technologies  Artisan Partners

Poor diversification

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

Pair Corralation between Sensient Technologies and Artisan Partners

Considering the 90-day investment horizon Sensient Technologies is expected to generate 1.27 times more return on investment than Artisan Partners. However, Sensient Technologies is 1.27 times more volatile than Artisan Partners Asset. It trades about 0.04 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.09 per unit of risk. If you would invest  7,298  in Sensient Technologies on October 22, 2024 and sell it today you would earn a total of  74.00  from holding Sensient Technologies or generate 1.01% return on investment over 90 days.

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

Sensient Technologies  vs.  Artisan Partners Asset

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Artisan Partners Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sensient Technologies and Artisan Partners

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

The idea behind Sensient Technologies and Artisan Partners Asset 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.