Correlation Between Sensient Technologies and Orion Engineered
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Orion Engineered 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 Orion Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Orion Engineered Carbons, you can compare the effects of market volatilities on Sensient Technologies and Orion Engineered 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 Orion Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Orion Engineered.
Diversification Opportunities for Sensient Technologies and Orion Engineered
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sensient and Orion is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons 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 Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Orion Engineered go up and down completely randomly.
Pair Corralation between Sensient Technologies and Orion Engineered
Considering the 90-day investment horizon Sensient Technologies is expected to generate 78.25 times less return on investment than Orion Engineered. But when comparing it to its historical volatility, Sensient Technologies is 2.14 times less risky than Orion Engineered. It trades about 0.01 of its potential returns per unit of risk. Orion Engineered Carbons is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,554 in Orion Engineered Carbons on August 27, 2024 and sell it today you would earn a total of 251.00 from holding Orion Engineered Carbons or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Orion Engineered Carbons
Performance |
| Timeline |
| Sensient Technologies |
| Orion Engineered Carbons |
Sensient Technologies and Orion Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Orion Engineered
The main advantage of trading using opposite Sensient Technologies and Orion Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Orion Engineered 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 Orion Engineered will offset losses from the drop in Orion Engineered's long position.| Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller | Sensient Technologies vs. Northern Technologies | Sensient Technologies vs. Cabot |
| Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies | Orion Engineered vs. Innospec | Orion Engineered 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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