Correlation Between Sensata Technologies and Sono Tek
Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Sono Tek 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 Sono Tek 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 Sono Tek Corp, you can compare the effects of market volatilities on Sensata Technologies and Sono Tek 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 Sono Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Sono Tek.
Diversification Opportunities for Sensata Technologies and Sono Tek
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sensata and Sono is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Sono Tek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sono Tek 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 Sono Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sono Tek Corp has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Sono Tek go up and down completely randomly.
Pair Corralation between Sensata Technologies and Sono Tek
Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Sono Tek. In addition to that, Sensata Technologies is 1.09 times more volatile than Sono Tek Corp. It trades about -0.24 of its total potential returns per unit of risk. Sono Tek Corp is currently generating about 0.09 per unit of volatility. If you would invest 434.00 in Sono Tek Corp on August 24, 2024 and sell it today you would earn a total of 14.99 from holding Sono Tek Corp or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensata Technologies Holding vs. Sono Tek Corp
Performance |
| Timeline |
| Sensata Technologies |
| Sono Tek Corp |
Sensata Technologies and Sono Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensata Technologies and Sono Tek
The main advantage of trading using opposite Sensata Technologies and Sono Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensata Technologies position performs unexpectedly, Sono Tek 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 Sono Tek will offset losses from the drop in Sono Tek's long position.| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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