Correlation Between MKS Instruments and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both MKS Instruments and Sensata 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 MKS Instruments and Sensata Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MKS Instruments and Sensata Technologies Holding, you can compare the effects of market volatilities on MKS Instruments and Sensata 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 MKS Instruments with a short position of Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKS Instruments and Sensata Technologies.
Diversification Opportunities for MKS Instruments and Sensata Technologies
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MKS and Sensata is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and MKS Instruments 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 MKS Instruments are associated (or correlated) with Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of MKS Instruments i.e., MKS Instruments and Sensata Technologies go up and down completely randomly.
Pair Corralation between MKS Instruments and Sensata Technologies
Given the investment horizon of 90 days MKS Instruments is expected to generate 1.7 times more return on investment than Sensata Technologies. However, MKS Instruments is 1.7 times more volatile than Sensata Technologies Holding. It trades about -0.02 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.11 per unit of risk. If you would invest 13,054 in MKS Instruments on August 24, 2024 and sell it today you would lose (1,683) from holding MKS Instruments or give up 12.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MKS Instruments vs. Sensata Technologies Holding
Performance |
| Timeline |
| MKS Instruments |
| Sensata Technologies |
MKS Instruments and Sensata Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MKS Instruments and Sensata Technologies
The main advantage of trading using opposite MKS Instruments and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKS Instruments position performs unexpectedly, Sensata 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 Sensata Technologies will offset losses from the drop in Sensata Technologies' long position.| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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