Correlation Between Sensient Technologies and Old Republic
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Old Republic 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 Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Old Republic International, you can compare the effects of market volatilities on Sensient Technologies and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Old Republic.
Diversification Opportunities for Sensient Technologies and Old Republic
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensient and Old is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Old Republic go up and down completely randomly.
Pair Corralation between Sensient Technologies and Old Republic
Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Old Republic. In addition to that, Sensient Technologies is 1.09 times more volatile than Old Republic International. It trades about -0.13 of its total potential returns per unit of risk. Old Republic International is currently generating about -0.11 per unit of volatility. If you would invest 3,683 in Old Republic International on September 12, 2024 and sell it today you would lose (85.00) from holding Old Republic International or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Old Republic International
Performance |
| Timeline |
| Sensient Technologies |
| Old Republic Interna |
Sensient Technologies and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Old Republic
The main advantage of trading using opposite Sensient Technologies and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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