Correlation Between Sensata Technologies and Coherent
Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Coherent 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 Coherent 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 Coherent, you can compare the effects of market volatilities on Sensata Technologies and Coherent 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 Coherent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Coherent.
Diversification Opportunities for Sensata Technologies and Coherent
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sensata and Coherent is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent 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 Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Coherent go up and down completely randomly.
Pair Corralation between Sensata Technologies and Coherent
Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Coherent. But the stock apears to be less risky and, when comparing its historical volatility, Sensata Technologies Holding is 2.12 times less risky than Coherent. The stock trades about -0.06 of its potential returns per unit of risk. The Coherent is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,291 in Coherent on November 2, 2024 and sell it today you would earn a total of 4,841 from holding Coherent or generate 112.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensata Technologies Holding vs. Coherent
Performance |
| Timeline |
| Sensata Technologies |
| Coherent |
Sensata Technologies and Coherent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensata Technologies and Coherent
The main advantage of trading using opposite Sensata Technologies and Coherent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensata Technologies position performs unexpectedly, Coherent 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 Coherent will offset losses from the drop in Coherent's long position.| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
| Coherent vs. MKS Instruments | Coherent vs. IPG Photonics | Coherent vs. Cognex | Coherent vs. Lumentum Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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