Correlation Between Sensient Technologies and Neo Performance
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Neo Performance 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 Neo Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Neo Performance Materials, you can compare the effects of market volatilities on Sensient Technologies and Neo Performance 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 Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Neo Performance.
Diversification Opportunities for Sensient Technologies and Neo Performance
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sensient and Neo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials 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 Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Neo Performance go up and down completely randomly.
Pair Corralation between Sensient Technologies and Neo Performance
Considering the 90-day investment horizon Sensient Technologies is expected to generate 1.1 times more return on investment than Neo Performance. However, Sensient Technologies is 1.1 times more volatile than Neo Performance Materials. It trades about -0.01 of its potential returns per unit of risk. Neo Performance Materials is currently generating about -0.09 per unit of risk. If you would invest 7,878 in Sensient Technologies on August 29, 2024 and sell it today you would lose (78.00) from holding Sensient Technologies or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Neo Performance Materials
Performance |
| Timeline |
| Sensient Technologies |
| Neo Performance Materials |
Sensient Technologies and Neo Performance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Neo Performance
The main advantage of trading using opposite Sensient Technologies and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Neo Performance 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 Neo Performance will offset losses from the drop in Neo Performance's long position.| Sensient Technologies vs. Direxion Daily FTSE | Sensient Technologies vs. Collegium Pharmaceutical | Sensient Technologies vs. KKR Co LP | Sensient Technologies vs. iShares Dividend and |
| Neo Performance vs. Akzo Nobel NV | Neo Performance vs. Avoca LLC | Neo Performance vs. Arkema SA ADR | Neo Performance vs. HUMANA INC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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