Correlation Between Kopernik International and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Kopernik International 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 Kopernik International and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kopernik International and Sentinel Small Pany, you can compare the effects of market volatilities on Kopernik International 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 Kopernik International with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kopernik International and Sentinel Small.
Diversification Opportunities for Kopernik International and Sentinel Small
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kopernik and Sentinel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik International 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 Kopernik International 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 Kopernik International 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 Kopernik International i.e., Kopernik International and Sentinel Small go up and down completely randomly.
Pair Corralation between Kopernik International and Sentinel Small
Assuming the 90 days horizon Kopernik International is expected to generate 13.15 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, Kopernik International is 1.66 times less risky than Sentinel Small. It trades about 0.01 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 670.00 in Sentinel Small Pany on September 3, 2024 and sell it today you would earn a total of 110.00 from holding Sentinel Small Pany or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kopernik International vs. Sentinel Small Pany
Performance |
| Timeline |
| Kopernik International |
| Sentinel Small Pany |
Kopernik International and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kopernik International and Sentinel Small
The main advantage of trading using opposite Kopernik International and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopernik International 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.The idea behind Kopernik International and Sentinel Small Pany 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.
| Sentinel Small vs. Vanguard Small Cap Index | Sentinel Small vs. Vanguard Small Cap Index | Sentinel Small vs. Vanguard Small Cap Index | Sentinel Small vs. Vanguard Small Cap Index |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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