Correlation Between 05971U2D8 and Sensient Technologies

Can any of the company-specific risk be diversified away by investing in both 05971U2D8 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 05971U2D8 and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCP 325 30 SEP 31 and Sensient Technologies, you can compare the effects of market volatilities on 05971U2D8 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 05971U2D8 with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05971U2D8 and Sensient Technologies.

Diversification Opportunities for 05971U2D8 and Sensient Technologies

-0.33

Correlation Coefficient

05971U2D8  Sensient Technologies

Very good diversification

The 3 months correlation between 05971U2D8 and Sensient is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BCP 325 30 SEP 31 and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and 05971U2D8 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 BCP 325 30 SEP 31 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 05971U2D8 i.e., 05971U2D8 and Sensient Technologies go up and down completely randomly.

Pair Corralation between 05971U2D8 and Sensient Technologies

Assuming the 90 days trading horizon BCP 325 30 SEP 31 is expected to generate 2.17 times more return on investment than Sensient Technologies. However, 05971U2D8 is 2.17 times more volatile than Sensient Technologies. It trades about 0.04 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of risk. If you would invest  9,215  in BCP 325 30 SEP 31 on October 9, 2024 and sell it today you would earn a total of  265.00  from holding BCP 325 30 SEP 31 or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.2%
Values	Daily Returns

BCP 325 30 SEP 31  vs.  Sensient Technologies

BCP 325 30

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCP 325 30 SEP 31 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 05971U2D8 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 05971U2D8 and Sensient Technologies

The main advantage of trading using opposite 05971U2D8 and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05971U2D8 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 BCP 325 30 SEP 31 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.