Correlation Between Absolute Convertible and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Sentinel Small, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Sentinel Small.
Diversification Opportunities for Absolute Convertible and Sentinel Small
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Absolute and Sentinel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small and Absolute Convertible 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 Absolute Convertible Arbitrage 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 has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Sentinel Small go up and down completely randomly.
Pair Corralation between Absolute Convertible and Sentinel Small
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.34 times more return on investment than Sentinel Small. However, Absolute Convertible Arbitrage is 2.98 times less risky than Sentinel Small. It trades about -0.3 of its potential returns per unit of risk. Sentinel Small is currently generating about -0.37 per unit of risk. If you would invest 1,151 in Absolute Convertible Arbitrage on October 11, 2024 and sell it today you would lose (32.00) from holding Absolute Convertible Arbitrage or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Sentinel Small
Performance |
| Timeline |
| Absolute Convertible |
| Sentinel Small |
Absolute Convertible and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Sentinel Small
The main advantage of trading using opposite Absolute Convertible and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Qs Growth Fund | Absolute Convertible vs. T Rowe Price | Absolute Convertible vs. Tfa Alphagen Growth | Absolute Convertible vs. Champlain Mid Cap |
| Sentinel Small vs. Absolute Convertible Arbitrage | Sentinel Small vs. Fidelity Vertible Securities | Sentinel Small vs. Mainstay Vertible Fund | Sentinel Small vs. Virtus Convertible |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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