Correlation Between Mativ Holdings and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Mativ Holdings 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 Mativ Holdings and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mativ Holdings and Sensient Technologies, you can compare the effects of market volatilities on Mativ Holdings 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 Mativ Holdings with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Sensient Technologies.
Diversification Opportunities for Mativ Holdings and Sensient Technologies
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mativ and Sensient is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings i.e., Mativ Holdings and Sensient Technologies go up and down completely randomly.
Pair Corralation between Mativ Holdings and Sensient Technologies
Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Sensient Technologies. In addition to that, Mativ Holdings is 2.98 times more volatile than Sensient Technologies. It trades about -0.08 of its total potential returns per unit of risk. Sensient Technologies is currently generating about -0.02 per unit of volatility. If you would invest 7,794 in Sensient Technologies on August 30, 2024 and sell it today you would lose (85.00) from holding Sensient Technologies or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mativ Holdings vs. Sensient Technologies
Performance |
| Timeline |
| Mativ Holdings |
| Sensient Technologies |
Mativ Holdings and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mativ Holdings and Sensient Technologies
The main advantage of trading using opposite Mativ Holdings and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings 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.| Mativ Holdings vs. Orion Engineered Carbons | Mativ Holdings vs. Select Energy Services | Mativ Holdings vs. Perimeter Solutions SA | Mativ Holdings vs. FutureFuel Corp |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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