Correlation Between Sentinel Small and Sentinel Common
Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Sentinel Common 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 Sentinel Small and Sentinel Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentinel Small Pany and Sentinel Mon Stock, you can compare the effects of market volatilities on Sentinel Small and Sentinel Common 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 Sentinel Small with a short position of Sentinel Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Sentinel Common.
Diversification Opportunities for Sentinel Small and Sentinel Common
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sentinel and Sentinel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and Sentinel Small 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 Sentinel Small Pany are associated (or correlated) with Sentinel Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Sentinel Small i.e., Sentinel Small and Sentinel Common go up and down completely randomly.
Pair Corralation between Sentinel Small and Sentinel Common
Assuming the 90 days horizon Sentinel Small is expected to generate 1.34 times less return on investment than Sentinel Common. In addition to that, Sentinel Small is 1.37 times more volatile than Sentinel Mon Stock. It trades about 0.05 of its total potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.1 per unit of volatility. If you would invest 4,986 in Sentinel Mon Stock on August 26, 2024 and sell it today you would earn a total of 2,190 from holding Sentinel Mon Stock or generate 43.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Small Pany vs. Sentinel Mon Stock
Performance |
| Timeline |
| Sentinel Small Pany |
| Sentinel Mon Stock |
Sentinel Small and Sentinel Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Sentinel Common
The main advantage of trading using opposite Sentinel Small and Sentinel Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Sentinel Common 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 Common will offset losses from the drop in Sentinel Common's long position.| Sentinel Small vs. Sentinel Mon Stock | Sentinel Small vs. Sentinel International Equity | Sentinel Small vs. Sentinel Balanced Fund | Sentinel Small vs. Calamos Growth Fund |
| Sentinel Common vs. Touchstone Small Cap | Sentinel Common vs. Touchstone Sands Capital | Sentinel Common vs. Mid Cap Growth | Sentinel Common vs. Mid Cap Growth |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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