Correlation Between Sensient Technologies and NBCUNIVERSAL

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

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

Diversification Opportunities for Sensient Technologies and NBCUNIVERSAL

0.19

Correlation Coefficient

Sensient Technologies  NBCUNIVERSAL

Average diversification

The 3 months correlation between Sensient and NBCUNIVERSAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Sensient Technologies and NBCUNIVERSAL

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the NBCUNIVERSAL. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 1.33 times less risky than NBCUNIVERSAL. The stock trades about -0.1 of its potential returns per unit of risk. The NBCUNIVERSAL MEDIA LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10,722  in NBCUNIVERSAL MEDIA LLC on October 8, 2024 and sell it today you would earn a total of  70.00  from holding NBCUNIVERSAL MEDIA LLC or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	46.77%
Values	Daily Returns

Sensient Technologies  vs.  NBCUNIVERSAL MEDIA LLC

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NBCUNIVERSAL MEDIA LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NBCUNIVERSAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sensient Technologies and NBCUNIVERSAL

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

The idea behind Sensient Technologies and NBCUNIVERSAL MEDIA LLC 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.