Correlation Between Sono Tek and Trimble
Can any of the company-specific risk be diversified away by investing in both Sono Tek and Trimble 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 Trimble 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 Trimble, you can compare the effects of market volatilities on Sono Tek and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Trimble.
Diversification Opportunities for Sono Tek and Trimble
Very weak diversification
The 3 months correlation between Sono and Trimble is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Sono Tek i.e., Sono Tek and Trimble go up and down completely randomly.
Pair Corralation between Sono Tek and Trimble
Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Trimble. In addition to that, Sono Tek is 1.25 times more volatile than Trimble. It trades about -0.01 of its total potential returns per unit of risk. Trimble is currently generating about 0.06 per unit of volatility. If you would invest 5,216 in Trimble on August 28, 2024 and sell it today you would earn a total of 2,079 from holding Trimble or generate 39.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sono Tek Corp vs. Trimble
Performance |
| Timeline |
| Sono Tek Corp |
| Trimble |
Sono Tek and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Trimble
The main advantage of trading using opposite Sono Tek and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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