Correlation Between Primo Brands and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Primo Brands 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 Primo Brands and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primo Brands and Sensient Technologies, you can compare the effects of market volatilities on Primo Brands 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 Primo Brands with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and Sensient Technologies.
Diversification Opportunities for Primo Brands and Sensient Technologies
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Primo and Sensient is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies and Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and Sensient Technologies go up and down completely randomly.
Pair Corralation between Primo Brands and Sensient Technologies
Given the investment horizon of 90 days Primo Brands is expected to generate 1.36 times more return on investment than Sensient Technologies. However, Primo Brands is 1.36 times more volatile than Sensient Technologies. It trades about 0.18 of its potential returns per unit of risk. Sensient Technologies is currently generating about -0.02 per unit of risk. If you would invest 2,603 in Primo Brands on August 30, 2024 and sell it today you would earn a total of 259.00 from holding Primo Brands or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primo Brands vs. Sensient Technologies
Performance |
| Timeline |
| Primo Brands |
| Sensient Technologies |
Primo Brands and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primo Brands and Sensient Technologies
The main advantage of trading using opposite Primo Brands and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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.| Primo Brands vs. Here Media | Primo Brands vs. Dave Busters Entertainment | Primo Brands vs. Southwest Airlines | Primo Brands vs. Playtech plc |
| 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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