Correlation Between Sensata Technologies and Fortive Corp

Can any of the company-specific risk be diversified away by investing in both Sensata Technologies and Fortive Corp 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 Fortive Corp 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 Fortive Corp, you can compare the effects of market volatilities on Sensata Technologies and Fortive Corp 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 Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensata Technologies and Fortive Corp.

Diversification Opportunities for Sensata Technologies and Fortive Corp

-0.13

Correlation Coefficient

Sensata Technologies  Fortive Corp

Good diversification

The 3 months correlation between Sensata and Fortive is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sensata Technologies Holding and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp 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 Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Sensata Technologies i.e., Sensata Technologies and Fortive Corp go up and down completely randomly.

Pair Corralation between Sensata Technologies and Fortive Corp

Allowing for the 90-day total investment horizon Sensata Technologies Holding is expected to generate 1.88 times more return on investment than Fortive Corp. However, Sensata Technologies is 1.88 times more volatile than Fortive Corp. It trades about 0.19 of its potential returns per unit of risk. Fortive Corp is currently generating about -0.09 per unit of risk. If you would invest  2,189  in Sensata Technologies Holding on May 5, 2025 and sell it today you would earn a total of  804.00  from holding Sensata Technologies Holding or generate 36.73% return on investment over 90 days.

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

Sensata Technologies Holding  vs.  Fortive Corp

Sensata Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sensata Technologies Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sensata Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fortive Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sensata Technologies and Fortive Corp

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

The idea behind Sensata Technologies Holding and Fortive Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.