Correlation Between Sensient Technologies and Chase
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Chase 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 Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Chase, you can compare the effects of market volatilities on Sensient Technologies and Chase 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 Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Chase.
Diversification Opportunities for Sensient Technologies and Chase
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensient and Chase is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase 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 Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Chase go up and down completely randomly.
Pair Corralation between Sensient Technologies and Chase
Considering the 90-day investment horizon Sensient Technologies is expected to generate 2.03 times less return on investment than Chase. In addition to that, Sensient Technologies is 1.04 times more volatile than Chase. It trades about 0.01 of its total potential returns per unit of risk. Chase is currently generating about 0.03 per unit of volatility. If you would invest 12,439 in Chase on August 31, 2024 and sell it today you would earn a total of 137.00 from holding Chase or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
Sensient Technologies vs. Chase
Performance |
| Timeline |
| Sensient Technologies |
| Chase |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sensient Technologies and Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Chase
The main advantage of trading using opposite Sensient Technologies and Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Chase 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 Chase will offset losses from the drop in Chase's long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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