Correlation Between Trimble and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Trimble and Sensata Technologies 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 Trimble and Sensata Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trimble and Sensata Technologies Holding, you can compare the effects of market volatilities on Trimble and Sensata Technologies 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 Trimble with a short position of Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimble and Sensata Technologies.
Diversification Opportunities for Trimble and Sensata Technologies
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Trimble and Sensata is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies and Trimble 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 Trimble are associated (or correlated) with Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of Trimble i.e., Trimble and Sensata Technologies go up and down completely randomly.
Pair Corralation between Trimble and Sensata Technologies
Given the investment horizon of 90 days Trimble is expected to generate 1.04 times more return on investment than Sensata Technologies. However, Trimble is 1.04 times more volatile than Sensata Technologies Holding. It trades about 0.06 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.01 per unit of risk. If you would invest 6,119 in Trimble on August 27, 2024 and sell it today you would earn a total of 1,113 from holding Trimble or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trimble vs. Sensata Technologies Holding
Performance |
| Timeline |
| Trimble |
| Sensata Technologies |
Trimble and Sensata Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trimble and Sensata Technologies
The main advantage of trading using opposite Trimble and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trimble position performs unexpectedly, Sensata Technologies 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 Sensata Technologies will offset losses from the drop in Sensata Technologies' long position.The idea behind Trimble and Sensata Technologies Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sensata Technologies vs. Cepton Inc | Sensata Technologies vs. SaverOne 2014 Ltd | Sensata Technologies vs. Kraken Robotics | Sensata Technologies vs. Focus Universal |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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