Correlation Between Sensient Technologies and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Quaker Chemical 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 Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Quaker Chemical, you can compare the effects of market volatilities on Sensient Technologies and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Quaker Chemical.
Diversification Opportunities for Sensient Technologies and Quaker Chemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensient and Quaker is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Quaker Chemical go up and down completely randomly.
Pair Corralation between Sensient Technologies and Quaker Chemical
Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.81 times more return on investment than Quaker Chemical. However, Sensient Technologies is 1.24 times less risky than Quaker Chemical. It trades about 0.09 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 5,836 in Sensient Technologies on August 27, 2024 and sell it today you would earn a total of 2,031 from holding Sensient Technologies or generate 34.8% 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. Quaker Chemical
Performance |
| Timeline |
| Sensient Technologies |
| Quaker Chemical |
Sensient Technologies and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Quaker Chemical
The main advantage of trading using opposite Sensient Technologies and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller | Sensient Technologies vs. Northern Technologies |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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