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

0.91

Correlation Coefficient

Vontier Corp  Sensata Technologies

Almost no diversification

The 3 months correlation between Vontier and Sensata is 0.91. 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 1.83 times less return on investment than Sensata Technologies. But when comparing it to its historical volatility, Vontier Corp is 1.83 times less risky than Sensata Technologies. It trades about 0.21 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,160  in Sensata Technologies Holding on May 7, 2025 and sell it today you would earn a total of  855.00  from holding Sensata Technologies Holding or generate 39.58% return on investment over 90 days.

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

Vontier Corp  vs.  Sensata Technologies Holding

Vontier Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vontier Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vontier Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sensata Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sensata Technologies Holding are ranked lower than 16 (%) 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.

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.

The idea behind Vontier Corp and Sensata Technologies Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.