Correlation Between Sensient Technologies and CONAGRA

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

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

Diversification Opportunities for Sensient Technologies and CONAGRA

-0.36

Correlation Coefficient

Sensient Technologies  CONAGRA

Very good diversification

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

Pair Corralation between Sensient Technologies and CONAGRA

Considering the 90-day investment horizon Sensient Technologies is expected to generate 2.6 times more return on investment than CONAGRA. However, Sensient Technologies is 2.6 times more volatile than CONAGRA BRANDS INC. It trades about 0.05 of its potential returns per unit of risk. CONAGRA BRANDS INC is currently generating about -0.06 per unit of risk. If you would invest  7,482  in Sensient Technologies on September 5, 2024 and sell it today you would earn a total of  322.00  from holding Sensient Technologies or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Sensient Technologies  vs.  CONAGRA BRANDS INC

Sensient Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensient Technologies are ranked lower than 4 (%) 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.

CONAGRA BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONAGRA BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONAGRA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sensient Technologies and CONAGRA

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

The idea behind Sensient Technologies and CONAGRA BRANDS INC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.