Correlation Between Collegium Pharmaceutical and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical 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 Collegium Pharmaceutical and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Sensient Technologies, you can compare the effects of market volatilities on Collegium Pharmaceutical 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 Collegium Pharmaceutical with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Sensient Technologies.
Diversification Opportunities for Collegium Pharmaceutical and Sensient Technologies
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Collegium and Sensient is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Sensient Technologies go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Sensient Technologies
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Sensient Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Collegium Pharmaceutical is 1.12 times less risky than Sensient Technologies. The stock trades about -0.4 of its potential returns per unit of risk. The Sensient Technologies is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 7,578 in Sensient Technologies on November 27, 2024 and sell it today you would lose (612.00) from holding Sensient Technologies or give up 8.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Sensient Technologies
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Sensient Technologies |
Collegium Pharmaceutical and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Sensient Technologies
The main advantage of trading using opposite Collegium Pharmaceutical and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical 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.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
| 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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