Correlation Between Vontier Corp and Sono Tek
Can any of the company-specific risk be diversified away by investing in both Vontier Corp and Sono Tek 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 Vontier Corp and Sono Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vontier Corp and Sono Tek Corp, you can compare the effects of market volatilities on Vontier Corp and Sono Tek 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 Vontier Corp with a short position of Sono Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vontier Corp and Sono Tek.
Diversification Opportunities for Vontier Corp and Sono Tek
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vontier and Sono is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Sono Tek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sono Tek Corp and Vontier Corp 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 Vontier Corp are associated (or correlated) with Sono Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sono Tek Corp has no effect on the direction of Vontier Corp i.e., Vontier Corp and Sono Tek go up and down completely randomly.
Pair Corralation between Vontier Corp and Sono Tek
Considering the 90-day investment horizon Vontier Corp is expected to generate 1.33 times more return on investment than Sono Tek. However, Vontier Corp is 1.33 times more volatile than Sono Tek Corp. It trades about 0.24 of its potential returns per unit of risk. Sono Tek Corp is currently generating about 0.09 per unit of risk. If you would invest 3,447 in Vontier Corp on August 27, 2024 and sell it today you would earn a total of 455.00 from holding Vontier Corp or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vontier Corp vs. Sono Tek Corp
Performance |
| Timeline |
| Vontier Corp |
| Sono Tek Corp |
Vontier Corp and Sono Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vontier Corp and Sono Tek
The main advantage of trading using opposite Vontier Corp and Sono Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vontier Corp position performs unexpectedly, Sono Tek 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 Sono Tek will offset losses from the drop in Sono Tek's long position.| Vontier Corp vs. Teledyne Technologies Incorporated | Vontier Corp vs. ESCO Technologies | Vontier Corp vs. MKS Instruments | Vontier Corp vs. Sensata Technologies Holding |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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