Correlation Between Sono Tek and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Sono Tek and Spectris Plc 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 Sono Tek and Spectris Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and Spectris plc, you can compare the effects of market volatilities on Sono Tek and Spectris Plc 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 Sono Tek with a short position of Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Spectris Plc.
Diversification Opportunities for Sono Tek and Spectris Plc
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sono and Spectris is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Sono Tek i.e., Sono Tek and Spectris Plc go up and down completely randomly.
Pair Corralation between Sono Tek and Spectris Plc
Given the investment horizon of 90 days Sono Tek Corp is expected to generate 0.57 times more return on investment than Spectris Plc. However, Sono Tek Corp is 1.75 times less risky than Spectris Plc. It trades about 0.09 of its potential returns per unit of risk. Spectris plc is currently generating about -0.08 per unit of risk. If you would invest 447.00 in Sono Tek Corp on August 27, 2024 and sell it today you would earn a total of 15.00 from holding Sono Tek Corp or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. Spectris plc
Performance |
| Timeline |
| Sono Tek Corp |
| Spectris plc |
Sono Tek and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Spectris Plc
The main advantage of trading using opposite Sono Tek and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.The idea behind Sono Tek Corp and Spectris plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Spectris Plc vs. Garmin | Spectris Plc vs. Keysight Technologies | Spectris Plc vs. Fortive Corp | Spectris Plc vs. Teledyne Technologies Incorporated |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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