Correlation Between Nasdaq 100 and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Sentinel Small Pany, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Sentinel Small.
Diversification Opportunities for Nasdaq 100 and Sentinel Small
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Sentinel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index 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 Nasdaq 100 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 Nasdaq 100 Index 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 Nasdaq 100 i.e., Nasdaq 100 and Sentinel Small go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Sentinel Small
Assuming the 90 days horizon Nasdaq 100 is expected to generate 1.1 times less return on investment than Sentinel Small. In addition to that, Nasdaq 100 is 1.18 times more volatile than Sentinel Small Pany. It trades about 0.06 of its total potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.08 per unit of volatility. If you would invest 550.00 in Sentinel Small Pany on September 12, 2024 and sell it today you would earn a total of 117.00 from holding Sentinel Small Pany or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Sentinel Small Pany
Performance |
| Timeline |
| Nasdaq 100 Index |
| Sentinel Small Pany |
Nasdaq 100 and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Sentinel Small
The main advantage of trading using opposite Nasdaq 100 and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Nasdaq 100 Index Fund | Nasdaq 100 vs. Nasdaq 100 Index Fund | Nasdaq 100 vs. Fidelity Zero Large | Nasdaq 100 vs. Vanguard Russell 2000 |
| Sentinel Small vs. Sp Midcap Index | Sentinel Small vs. Sp 500 Index | Sentinel Small vs. Nasdaq 100 Index Fund | Sentinel Small vs. Deutsche Sp 500 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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