Correlation Between Sensient Technologies and Artisan Partners
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Artisan Partners 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 Sensient Technologies and Artisan Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Artisan Partners Asset, you can compare the effects of market volatilities on Sensient Technologies and Artisan Partners 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 Sensient Technologies with a short position of Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Artisan Partners.
Diversification Opportunities for Sensient Technologies and Artisan Partners
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensient and Artisan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset and Sensient 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 Sensient Technologies are associated (or correlated) with Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Artisan Partners go up and down completely randomly.
Pair Corralation between Sensient Technologies and Artisan Partners
Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Artisan Partners. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 1.12 times less risky than Artisan Partners. The stock trades about -0.19 of its potential returns per unit of risk. The Artisan Partners Asset is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,833 in Artisan Partners Asset on September 12, 2024 and sell it today you would earn a total of 21.00 from holding Artisan Partners Asset or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Artisan Partners Asset
Performance |
| Timeline |
| Sensient Technologies |
| Artisan Partners Asset |
Sensient Technologies and Artisan Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Artisan Partners
The main advantage of trading using opposite Sensient Technologies and Artisan Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Artisan Partners 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 Artisan Partners will offset losses from the drop in Artisan Partners' long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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