Correlation Between Sensient Technologies and Hibbett Sports
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Hibbett Sports 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 Hibbett Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Hibbett Sports, you can compare the effects of market volatilities on Sensient Technologies and Hibbett Sports 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 Hibbett Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Hibbett Sports.
Diversification Opportunities for Sensient Technologies and Hibbett Sports
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sensient and Hibbett is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Hibbett Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hibbett Sports 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 Hibbett Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hibbett Sports has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Hibbett Sports go up and down completely randomly.
Pair Corralation between Sensient Technologies and Hibbett Sports
Considering the 90-day investment horizon Sensient Technologies is expected to generate 6.53 times less return on investment than Hibbett Sports. But when comparing it to its historical volatility, Sensient Technologies is 1.78 times less risky than Hibbett Sports. It trades about 0.03 of its potential returns per unit of risk. Hibbett Sports is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,867 in Hibbett Sports on June 9, 2024 and sell it today you would earn a total of 4,882 from holding Hibbett Sports or generate 126.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 89.31% |
Values | Daily Returns |
Sensient Technologies vs. Hibbett Sports
Performance |
Timeline |
Sensient Technologies |
Hibbett Sports |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Sensient Technologies and Hibbett Sports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sensient Technologies and Hibbett Sports
The main advantage of trading using opposite Sensient Technologies and Hibbett Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Hibbett Sports 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 Hibbett Sports will offset losses from the drop in Hibbett Sports' long position.Sensient Technologies vs. Ecolab Inc | Sensient Technologies vs. Pfizer Inc | Sensient Technologies vs. Verisk Analytics | Sensient Technologies vs. ZKB Gold ETF |
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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 Stocks Directory module to find actively traded stocks across global markets.
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