Correlation Between Wrap Technologies and Sensata Technologies

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

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

Diversification Opportunities for Wrap Technologies and Sensata Technologies

-0.38

Correlation Coefficient

Wrap Technologies  Sensata Technologies

Very good diversification

The 3 months correlation between Wrap and Sensata is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wrap Technologies and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and Wrap 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 Wrap Technologies 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 Wrap Technologies i.e., Wrap Technologies and Sensata Technologies go up and down completely randomly.

Pair Corralation between Wrap Technologies and Sensata Technologies

Given the investment horizon of 90 days Wrap Technologies is expected to generate 3.05 times more return on investment than Sensata Technologies. However, Wrap Technologies is 3.05 times more volatile than Sensata Technologies Holding. It trades about 0.02 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.06 per unit of risk. If you would invest  265.00  in Wrap Technologies on October 24, 2024 and sell it today you would lose (44.00) from holding Wrap Technologies or give up 16.6% of portfolio value over 90 days.

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

Wrap Technologies  vs.  Sensata Technologies Holding

Wrap Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wrap Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Wrap Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Sensata Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensata Technologies Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wrap Technologies and Sensata Technologies

The main advantage of trading using opposite Wrap Technologies and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrap Technologies 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 Wrap Technologies 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.