Correlation Between Danaher and Senseonics Holdings

Can any of the company-specific risk be diversified away by investing in both Danaher and Senseonics Holdings 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 Danaher and Senseonics Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Danaher and Senseonics Holdings, you can compare the effects of market volatilities on Danaher and Senseonics Holdings 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 Danaher with a short position of Senseonics Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and Senseonics Holdings.

Diversification Opportunities for Danaher and Senseonics Holdings

0.57

Correlation Coefficient

Danaher  Senseonics Holdings

Very weak diversification

The 3 months correlation between Danaher and Senseonics is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and Senseonics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senseonics Holdings and Danaher 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 Danaher are associated (or correlated) with Senseonics Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senseonics Holdings has no effect on the direction of Danaher i.e., Danaher and Senseonics Holdings go up and down completely randomly.

Pair Corralation between Danaher and Senseonics Holdings

Considering the 90-day investment horizon Danaher is expected to generate 0.27 times more return on investment than Senseonics Holdings. However, Danaher is 3.77 times less risky than Senseonics Holdings. It trades about -0.26 of its potential returns per unit of risk. Senseonics Holdings is currently generating about -0.5 per unit of risk. If you would invest  24,753  in Danaher on January 24, 2024 and sell it today you would lose (1,145) from holding Danaher or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Danaher  vs.  Senseonics Holdings

Danaher

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Danaher are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Danaher is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Senseonics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senseonics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Danaher and Senseonics Holdings

The main advantage of trading using opposite Danaher and Senseonics Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, Senseonics Holdings 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 Senseonics Holdings will offset losses from the drop in Senseonics Holdings' long position.

The idea behind Danaher and Senseonics Holdings 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.