Correlation Between Sensient Technologies and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and KVH Industries 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 KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and KVH Industries, you can compare the effects of market volatilities on Sensient Technologies and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and KVH Industries.
Diversification Opportunities for Sensient Technologies and KVH Industries
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sensient and KVH is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and KVH Industries go up and down completely randomly.
Pair Corralation between Sensient Technologies and KVH Industries
Considering the 90-day investment horizon Sensient Technologies is expected to generate 12.88 times less return on investment than KVH Industries. But when comparing it to its historical volatility, Sensient Technologies is 1.06 times less risky than KVH Industries. It trades about 0.03 of its potential returns per unit of risk. KVH Industries is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 464.00 in KVH Industries on August 31, 2024 and sell it today you would earn a total of 87.00 from holding KVH Industries or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. KVH Industries
Performance |
| Timeline |
| Sensient Technologies |
| KVH Industries |
Sensient Technologies and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and KVH Industries
The main advantage of trading using opposite Sensient Technologies and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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