Correlation Between Teleflex Incorporated and Sensient Technologies

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

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

Diversification Opportunities for Teleflex Incorporated and Sensient Technologies

0.34

Correlation Coefficient

Teleflex Incorporated  Sensient Technologies

Weak diversification

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

Pair Corralation between Teleflex Incorporated and Sensient Technologies

Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Sensient Technologies. In addition to that, Teleflex Incorporated is 1.67 times more volatile than Sensient Technologies. It trades about -0.17 of its total potential returns per unit of risk. Sensient Technologies is currently generating about -0.1 per unit of volatility. If you would invest  7,636  in Sensient Technologies on October 8, 2024 and sell it today you would lose (644.00) from holding Sensient Technologies or give up 8.43% of portfolio value over 90 days.

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

Teleflex Incorporated  vs.  Sensient Technologies

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Teleflex Incorporated and Sensient Technologies

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

The idea behind Teleflex Incorporated and Sensient Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.