Correlation Between Sensient Technologies and Treasury Wine

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

By analyzing existing cross correlation between Sensient Technologies and Treasury Wine Estates, you can compare the effects of market volatilities on Sensient Technologies and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Treasury Wine.

Diversification Opportunities for Sensient Technologies and Treasury Wine

-0.36

Correlation Coefficient

Sensient Technologies  Treasury Wine

Very good diversification

The 3 months correlation between Sensient and Treasury is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Treasury Wine go up and down completely randomly.

Pair Corralation between Sensient Technologies and Treasury Wine

Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.74 times more return on investment than Treasury Wine. However, Sensient Technologies is 1.36 times less risky than Treasury Wine. It trades about 0.05 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.11 per unit of risk. If you would invest  7,061  in Sensient Technologies on December 29, 2024 and sell it today you would earn a total of  274.00  from holding Sensient Technologies or generate 3.88% return on investment over 90 days.

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

Sensient Technologies  vs.  Treasury Wine Estates

Sensient Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Treasury Wine Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Sensient Technologies and Treasury Wine

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

The idea behind Sensient Technologies and Treasury Wine Estates 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.