Correlation Between Artisan Partners and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Artisan Partners 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 Artisan Partners and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artisan Partners Asset and Sensient Technologies, you can compare the effects of market volatilities on Artisan Partners 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 Artisan Partners with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and Sensient Technologies.
Diversification Opportunities for Artisan Partners and Sensient Technologies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Artisan and Sensient is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Artisan Partners 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 Artisan Partners Asset 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 Artisan Partners i.e., Artisan Partners and Sensient Technologies go up and down completely randomly.
Pair Corralation between Artisan Partners and Sensient Technologies
Given the investment horizon of 90 days Artisan Partners Asset is expected to generate 1.12 times more return on investment than Sensient Technologies. However, Artisan Partners is 1.12 times more volatile than Sensient Technologies. It trades about 0.07 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of risk. If you would invest 2,782 in Artisan Partners Asset on September 5, 2024 and sell it today you would earn a total of 2,107 from holding Artisan Partners Asset or generate 75.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Artisan Partners Asset vs. Sensient Technologies
Performance |
| Timeline |
| Artisan Partners Asset |
| Sensient Technologies |
Artisan Partners and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artisan Partners and Sensient Technologies
The main advantage of trading using opposite Artisan Partners and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Partners 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.| Artisan Partners vs. Visa Class A | Artisan Partners vs. Diamond Hill Investment | Artisan Partners vs. Associated Capital Group | Artisan Partners vs. Deutsche Bank AG |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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