Correlation Between Sensata Technologies and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Beacon Roofing 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 Sensata Technologies and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensata Technologies Holding and Beacon Roofing Supply, you can compare the effects of market volatilities on Sensata Technologies and Beacon Roofing 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 Sensata Technologies with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Beacon Roofing.
Diversification Opportunities for Sensata Technologies and Beacon Roofing
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sensata and Beacon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Sensata Technologies 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 Sensata Technologies Holding are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Beacon Roofing go up and down completely randomly.
Pair Corralation between Sensata Technologies and Beacon Roofing
Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Beacon Roofing. But the stock apears to be less risky and, when comparing its historical volatility, Sensata Technologies Holding is 1.1 times less risky than Beacon Roofing. The stock trades about -0.02 of its potential returns per unit of risk. The Beacon Roofing Supply is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,638 in Beacon Roofing Supply on August 27, 2024 and sell it today you would earn a total of 5,580 from holding Beacon Roofing Supply or generate 98.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensata Technologies Holding vs. Beacon Roofing Supply
Performance |
| Timeline |
| Sensata Technologies |
| Beacon Roofing Supply |
Sensata Technologies and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensata Technologies and Beacon Roofing
The main advantage of trading using opposite Sensata Technologies and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensata Technologies position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.| Sensata Technologies vs. Cepton Inc | Sensata Technologies vs. SaverOne 2014 Ltd | Sensata Technologies vs. Kraken Robotics | Sensata Technologies vs. Focus Universal |
| Beacon Roofing vs. Global Industrial Co | Beacon Roofing vs. BlueLinx Holdings | Beacon Roofing vs. WESCO International | Beacon Roofing vs. MSC Industrial Direct |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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