Correlation Between Energous and Sensata Technologies

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

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

Diversification Opportunities for Energous and Sensata Technologies

-0.13

Correlation Coefficient

Energous  Sensata Technologies

Good diversification

The 3 months correlation between Energous and Sensata is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Energous and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and Energous 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 Energous are associated (or correlated) with Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of Energous i.e., Energous and Sensata Technologies go up and down completely randomly.

Pair Corralation between Energous and Sensata Technologies

Given the investment horizon of 90 days Energous is expected to generate 33.39 times more return on investment than Sensata Technologies. However, Energous is 33.39 times more volatile than Sensata Technologies Holding. It trades about 0.1 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about 0.04 per unit of risk. If you would invest  29.00  in Energous on December 20, 2024 and sell it today you would earn a total of  4.00  from holding Energous or generate 13.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Energous  vs.  Sensata Technologies Holding

Energous

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energous are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Energous unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sensata Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensata Technologies Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sensata Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Energous and Sensata Technologies

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

The idea behind Energous and Sensata Technologies Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.