Correlation Between Sentinel Balanced and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Sentinel Balanced 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 Sentinel Balanced and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentinel Balanced Fund and Sentinel Small, you can compare the effects of market volatilities on Sentinel Balanced 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 Sentinel Balanced with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Balanced and Sentinel Small.
Diversification Opportunities for Sentinel Balanced and Sentinel Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sentinel and Sentinel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Balanced Fund and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small and Sentinel Balanced 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 Balanced 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 has no effect on the direction of Sentinel Balanced i.e., Sentinel Balanced and Sentinel Small go up and down completely randomly.
Pair Corralation between Sentinel Balanced and Sentinel Small
Assuming the 90 days horizon Sentinel Balanced is expected to generate 1.51 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, Sentinel Balanced Fund is 2.01 times less risky than Sentinel Small. It trades about 0.11 of its potential returns per unit of risk. Sentinel Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Sentinel Small on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Sentinel Small or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sentinel Balanced Fund vs. Sentinel Small
Performance |
| Timeline |
| Sentinel Balanced |
| Sentinel Small |
Sentinel Balanced and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Balanced and Sentinel Small
The main advantage of trading using opposite Sentinel Balanced and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Balanced 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.| Sentinel Balanced vs. Sentinel Balanced Fund | Sentinel Balanced vs. Sentinel Balanced Fund | Sentinel Balanced vs. Fidelity Worldwide Fund | Sentinel Balanced vs. Franklin Growth Allocation |
| Sentinel Small vs. American Funds Retirement | Sentinel Small vs. Strategic Allocation Moderate | Sentinel Small vs. Calvert Moderate Allocation | Sentinel Small vs. Wisdomtree Siegel Moderate |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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