Correlation Between Inflection Point and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Inflection Point 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 Inflection Point and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflection Point Acquisition and Sensient Technologies, you can compare the effects of market volatilities on Inflection Point 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 Inflection Point with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and Sensient Technologies.
Diversification Opportunities for Inflection Point and Sensient Technologies
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inflection and Sensient is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Inflection Point 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 Inflection Point Acquisition 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 Inflection Point i.e., Inflection Point and Sensient Technologies go up and down completely randomly.
Pair Corralation between Inflection Point and Sensient Technologies
Assuming the 90 days horizon Inflection Point is expected to generate 1.04 times less return on investment than Sensient Technologies. But when comparing it to its historical volatility, Inflection Point Acquisition is 5.91 times less risky than Sensient Technologies. It trades about 0.13 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,625 in Sensient Technologies on September 3, 2024 and sell it today you would earn a total of 220.00 from holding Sensient Technologies or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflection Point Acquisition vs. Sensient Technologies
Performance |
| Timeline |
| Inflection Point Acq |
| Sensient Technologies |
Inflection Point and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflection Point and Sensient Technologies
The main advantage of trading using opposite Inflection Point and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflection Point 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.| Inflection Point vs. Arrow Electronics | Inflection Point vs. BioNTech SE | Inflection Point vs. BJs Restaurants | Inflection Point vs. Yum Brands |
| Sensient Technologies vs. SPACE | Sensient Technologies vs. Bayview Acquisition Corp | Sensient Technologies vs. T Rowe Price | Sensient Technologies vs. Ampleforth |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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