Correlation Between Canlan Ice and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Sensient Technologies, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Sensient Technologies.
Diversification Opportunities for Canlan Ice and Sensient Technologies
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canlan and Sensient is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Sensient Technologies go up and down completely randomly.
Pair Corralation between Canlan Ice and Sensient Technologies
Assuming the 90 days horizon Canlan Ice is expected to generate 5.96 times less return on investment than Sensient Technologies. But when comparing it to its historical volatility, Canlan Ice Sports is 11.38 times less risky than Sensient Technologies. It trades about 0.14 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,982 in Sensient Technologies on November 9, 2024 and sell it today you would earn a total of 1,758 from holding Sensient Technologies or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Canlan Ice Sports vs. Sensient Technologies
Performance |
| Timeline |
| Canlan Ice Sports |
| Sensient Technologies |
Canlan Ice and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Sensient Technologies
The main advantage of trading using opposite Canlan Ice and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. BCE Inc | Canlan Ice vs. PepsiCo | Canlan Ice vs. Diageo PLC ADR | Canlan Ice vs. The Coca Cola |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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