Correlation Between Sentinel Balanced and Touchstone Dividend
Can any of the company-specific risk be diversified away by investing in both Sentinel Balanced and Touchstone Dividend 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 Touchstone Dividend 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 Touchstone Dividend Equity, you can compare the effects of market volatilities on Sentinel Balanced and Touchstone Dividend 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 Touchstone Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Balanced and Touchstone Dividend.
Diversification Opportunities for Sentinel Balanced and Touchstone Dividend
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sentinel and Touchstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Balanced Fund and Touchstone Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Dividend 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 Touchstone Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Dividend has no effect on the direction of Sentinel Balanced i.e., Sentinel Balanced and Touchstone Dividend go up and down completely randomly.
Pair Corralation between Sentinel Balanced and Touchstone Dividend
Assuming the 90 days horizon Sentinel Balanced Fund is expected to generate 0.72 times more return on investment than Touchstone Dividend. However, Sentinel Balanced Fund is 1.39 times less risky than Touchstone Dividend. It trades about 0.1 of its potential returns per unit of risk. Touchstone Dividend Equity is currently generating about 0.06 per unit of risk. If you would invest 2,210 in Sentinel Balanced Fund on September 3, 2024 and sell it today you would earn a total of 658.00 from holding Sentinel Balanced Fund or generate 29.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Balanced Fund vs. Touchstone Dividend Equity
Performance |
| Timeline |
| Sentinel Balanced |
| Touchstone Dividend |
Sentinel Balanced and Touchstone Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Balanced and Touchstone Dividend
The main advantage of trading using opposite Sentinel Balanced and Touchstone Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Balanced position performs unexpectedly, Touchstone Dividend 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 Touchstone Dividend will offset losses from the drop in Touchstone Dividend'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 |
| Touchstone Dividend vs. Vanguard Value Index | Touchstone Dividend vs. Dodge Cox Stock | Touchstone Dividend vs. American Funds American | Touchstone Dividend vs. American Funds American |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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