Correlation Between Sono Tek and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Sono Tek 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 Sono Tek and Sensata Technologies 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 Sensata Technologies Holding, you can compare the effects of market volatilities on Sono Tek 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 Sono Tek with a short position of Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Sensata Technologies.
Diversification Opportunities for Sono Tek and Sensata Technologies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sono and Sensata is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies 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 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 Sono Tek i.e., Sono Tek and Sensata Technologies go up and down completely randomly.
Pair Corralation between Sono Tek and Sensata Technologies
Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Sensata Technologies. In addition to that, Sono Tek is 1.79 times more volatile than Sensata Technologies Holding. It trades about -0.19 of its total potential returns per unit of risk. Sensata Technologies Holding is currently generating about 0.0 per unit of volatility. If you would invest 2,725 in Sensata Technologies Holding on November 3, 2024 and sell it today you would lose (5.00) from holding Sensata Technologies Holding or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. Sensata Technologies Holding
Performance |
| Timeline |
| Sono Tek Corp |
| Sensata Technologies |
Sono Tek and Sensata Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Sensata Technologies
The main advantage of trading using opposite Sono Tek and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek 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.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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