Correlation Between TOLEDO and Sensient Technologies

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

By analyzing existing cross correlation between TOLEDO HOSP 5325 and Sensient Technologies, you can compare the effects of market volatilities on TOLEDO 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 TOLEDO with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOLEDO and Sensient Technologies.

Diversification Opportunities for TOLEDO and Sensient Technologies

0.2

Correlation Coefficient

TOLEDO  Sensient Technologies

Modest diversification

The 3 months correlation between TOLEDO and Sensient is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding TOLEDO HOSP 5325 and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and TOLEDO 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 TOLEDO HOSP 5325 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 TOLEDO i.e., TOLEDO and Sensient Technologies go up and down completely randomly.

Pair Corralation between TOLEDO and Sensient Technologies

Assuming the 90 days trading horizon TOLEDO HOSP 5325 is expected to under-perform the Sensient Technologies. In addition to that, TOLEDO is 4.36 times more volatile than Sensient Technologies. It trades about -0.07 of its total potential returns per unit of risk. Sensient Technologies is currently generating about -0.11 per unit of volatility. If you would invest  7,979  in Sensient Technologies on September 28, 2024 and sell it today you would lose (775.50) from holding Sensient Technologies or give up 9.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	68.25%
Values	Daily Returns

TOLEDO HOSP 5325  vs.  Sensient Technologies

TOLEDO HOSP 5325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOLEDO HOSP 5325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for TOLEDO HOSP 5325 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 unsteady 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 TOLEDO and Sensient Technologies

The main advantage of trading using opposite TOLEDO and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOLEDO 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 TOLEDO HOSP 5325 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.