Correlation Between Vontier Corp and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Vontier Corp 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 Vontier Corp and Sensata Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vontier Corp and Sensata Technologies Holding, you can compare the effects of market volatilities on Vontier Corp 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 Vontier Corp with a short position of Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vontier Corp and Sensata Technologies.
Diversification Opportunities for Vontier Corp and Sensata Technologies
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vontier and Sensata is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies 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 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 Vontier Corp i.e., Vontier Corp and Sensata Technologies go up and down completely randomly.
Pair Corralation between Vontier Corp and Sensata Technologies
Considering the 90-day investment horizon Vontier Corp is expected to generate 1.68 times less return on investment than Sensata Technologies. But when comparing it to its historical volatility, Vontier Corp is 1.18 times less risky than Sensata Technologies. It trades about 0.13 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,724 in Sensata Technologies Holding on October 21, 2024 and sell it today you would earn a total of 118.00 from holding Sensata Technologies Holding or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vontier Corp vs. Sensata Technologies Holding
Performance |
| Timeline |
| Vontier Corp |
| Sensata Technologies |
Vontier Corp and Sensata Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vontier Corp and Sensata Technologies
The main advantage of trading using opposite Vontier Corp and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vontier Corp 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.| Vontier Corp vs. Teledyne Technologies Incorporated | Vontier Corp vs. ESCO Technologies | Vontier Corp vs. MKS Instruments | Vontier Corp vs. Sensata Technologies Holding |
| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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