Correlation Between World Energy and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both World Energy and Sentinel Small 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 World Energy and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Sentinel Small Pany, you can compare the effects of market volatilities on World Energy and Sentinel Small 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 World Energy with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Sentinel Small.
Diversification Opportunities for World Energy and Sentinel Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between World and Sentinel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Sentinel Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small Pany and World Energy 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 World Energy Fund are associated (or correlated) with Sentinel Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small Pany has no effect on the direction of World Energy i.e., World Energy and Sentinel Small go up and down completely randomly.
Pair Corralation between World Energy and Sentinel Small
Assuming the 90 days horizon World Energy is expected to generate 1.11 times less return on investment than Sentinel Small. In addition to that, World Energy is 1.09 times more volatile than Sentinel Small Pany. It trades about 0.08 of its total potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.1 per unit of volatility. If you would invest 611.00 in Sentinel Small Pany on September 4, 2024 and sell it today you would earn a total of 169.00 from holding Sentinel Small Pany or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Sentinel Small Pany
Performance |
| Timeline |
| World Energy |
| Sentinel Small Pany |
World Energy and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Sentinel Small
The main advantage of trading using opposite World Energy and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Sentinel Small 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 Sentinel Small will offset losses from the drop in Sentinel Small's long position.| World Energy vs. Vanguard Financials Index | World Energy vs. 1919 Financial Services | World Energy vs. Fidelity Advisor Financial | World Energy vs. Blackrock Financial Institutions |
| Sentinel Small vs. Gmo Resources | Sentinel Small vs. World Energy Fund | Sentinel Small vs. Oil Gas Ultrasector | Sentinel Small vs. Goehring Rozencwajg Resources |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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