Correlation Between Dentsply Sirona and Owlet

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

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

Diversification Opportunities for Dentsply Sirona and Owlet

0.04

Correlation Coefficient

Dentsply Sirona  Owlet

Significant diversification

The 3 months correlation between Dentsply and Owlet is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Owlet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owlet Inc and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with Owlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owlet Inc has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Owlet go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Owlet

Given the investment horizon of 90 days Dentsply Sirona is expected to under-perform the Owlet. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 2.42 times less risky than Owlet. The stock trades about -0.05 of its potential returns per unit of risk. The Owlet Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  886.00  in Owlet Inc on October 7, 2024 and sell it today you would lose (431.00) from holding Owlet Inc or give up 48.65% of portfolio value over 90 days.

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

Dentsply Sirona  vs.  Owlet Inc

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic 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.

Owlet Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Owlet Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Owlet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dentsply Sirona and Owlet

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

The idea behind Dentsply Sirona and Owlet Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.