Correlation Between Cognex and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Cognex 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 Cognex and Sensata Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and Sensata Technologies Holding, you can compare the effects of market volatilities on Cognex 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 Cognex with a short position of Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Sensata Technologies.
Diversification Opportunities for Cognex and Sensata Technologies
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognex and Sensata is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and Cognex 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 Cognex 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 Cognex i.e., Cognex and Sensata Technologies go up and down completely randomly.
Pair Corralation between Cognex and Sensata Technologies
Given the investment horizon of 90 days Cognex is expected to generate 1.0 times more return on investment than Sensata Technologies. However, Cognex is 1.0 times less risky than Sensata Technologies. It trades about 0.11 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.16 per unit of risk. If you would invest 3,862 in Cognex on August 25, 2024 and sell it today you would earn a total of 205.00 from holding Cognex or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognex vs. Sensata Technologies Holding
Performance |
| Timeline |
| Cognex |
| Sensata Technologies |
Cognex and Sensata Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognex and Sensata Technologies
The main advantage of trading using opposite Cognex and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex 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.| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex vs. MKS Instruments |
| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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