Correlation Between CompX International and Senstar Technologies
Can any of the company-specific risk be diversified away by investing in both CompX International and Senstar 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 CompX International and Senstar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and Senstar Technologies, you can compare the effects of market volatilities on CompX International and Senstar 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 CompX International with a short position of Senstar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Senstar Technologies.
Diversification Opportunities for CompX International and Senstar Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CompX and Senstar is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Senstar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senstar Technologies and CompX International 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 CompX International are associated (or correlated) with Senstar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senstar Technologies has no effect on the direction of CompX International i.e., CompX International and Senstar Technologies go up and down completely randomly.
Pair Corralation between CompX International and Senstar Technologies
Considering the 90-day investment horizon CompX International is expected to under-perform the Senstar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, CompX International is 1.58 times less risky than Senstar Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Senstar Technologies is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Senstar Technologies on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Senstar Technologies or generate 86.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompX International vs. Senstar Technologies
Performance |
| Timeline |
| CompX International |
| Senstar Technologies |
CompX International and Senstar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and Senstar Technologies
The main advantage of trading using opposite CompX International and Senstar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, Senstar 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 Senstar Technologies will offset losses from the drop in Senstar Technologies' long position.| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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