Correlation Between American Funds and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Sentinel Small Pany, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sentinel Small.
Diversification Opportunities for American Funds and Sentinel Small
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Sentinel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement 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 American Funds 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 American Funds Retirement 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 American Funds i.e., American Funds and Sentinel Small go up and down completely randomly.
Pair Corralation between American Funds and Sentinel Small
Assuming the 90 days horizon American Funds is expected to generate 2.35 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, American Funds Retirement is 2.93 times less risky than Sentinel Small. It trades about 0.14 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Sentinel Small Pany on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Sentinel Small Pany or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Sentinel Small Pany
Performance |
| Timeline |
| American Funds Retirement |
| Sentinel Small Pany |
American Funds and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sentinel Small
The main advantage of trading using opposite American Funds and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ab Global Real | American Funds vs. Ab Global Real | American Funds vs. Qs Global Equity |
| Sentinel Small vs. Barings Global Floating | Sentinel Small vs. Alliancebernstein Global High | Sentinel Small vs. Ab Global Real | Sentinel Small vs. Ab Global Bond |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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