Correlation Between Sensata Technologies and Roper Technologies
Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Roper 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 Sensata Technologies and Roper Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensata Technologies Holding and Roper Technologies Common, you can compare the effects of market volatilities on Sensata Technologies and Roper 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 Sensata Technologies with a short position of Roper Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Roper Technologies.
Diversification Opportunities for Sensata Technologies and Roper Technologies
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensata and Roper is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Roper Technologies Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies Common and Sensata 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 Sensata Technologies Holding are associated (or correlated) with Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies Common has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Roper Technologies go up and down completely randomly.
Pair Corralation between Sensata Technologies and Roper Technologies
Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to under-perform the Roper Technologies. In addition to that, Sensata Technologies is 1.92 times more volatile than Roper Technologies Common. It trades about -0.06 of its total potential returns per unit of risk. Roper Technologies Common is currently generating about 0.08 per unit of volatility. If you would invest 46,849 in Roper Technologies Common on January 24, 2024 and sell it today you would earn a total of 7,062 from holding Roper Technologies Common or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensata Technologies Holding vs. Roper Technologies Common
Performance |
| Timeline |
| Sensata Technologies |
| Roper Technologies Common |
Sensata Technologies and Roper Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensata Technologies and Roper Technologies
The main advantage of trading using opposite Sensata Technologies and Roper Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensata Technologies position performs unexpectedly, Roper 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 Roper Technologies will offset losses from the drop in Roper Technologies' long position.| Sensata Technologies vs. Coherent | Sensata Technologies vs. ESCO Technologies | Sensata Technologies vs. Mesa Laboratories | Sensata Technologies vs. Vishay Precision Group |
| Roper Technologies vs. Manhattan Associates | Roper Technologies vs. ANSYS Inc | Roper Technologies vs. Guidewire Software | Roper Technologies vs. SAP SE ADR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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