Correlation Between Sensata Technologies and Fortive Corp
Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Fortive Corp 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 Fortive Corp 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 Fortive Corp, you can compare the effects of market volatilities on Sensata Technologies and Fortive Corp 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 Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Fortive Corp.
Diversification Opportunities for Sensata Technologies and Fortive Corp
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sensata and Fortive is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp 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 Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Fortive Corp go up and down completely randomly.
Pair Corralation between Sensata Technologies and Fortive Corp
Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Fortive Corp. In addition to that, Sensata Technologies is 1.45 times more volatile than Fortive Corp. It trades about -0.24 of its total potential returns per unit of risk. Fortive Corp is currently generating about 0.07 per unit of volatility. If you would invest 7,551 in Fortive Corp on August 24, 2024 and sell it today you would earn a total of 144.00 from holding Fortive Corp or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensata Technologies Holding vs. Fortive Corp
Performance |
| Timeline |
| Sensata Technologies |
| Fortive Corp |
Sensata Technologies and Fortive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensata Technologies and Fortive Corp
The main advantage of trading using opposite Sensata Technologies and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensata Technologies position performs unexpectedly, Fortive Corp 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 Fortive Corp will offset losses from the drop in Fortive Corp's long position.| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
| Fortive Corp vs. Vishay Precision Group | Fortive Corp vs. Sensata Technologies Holding | Fortive Corp vs. Badger Meter | Fortive Corp vs. Trimble |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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