Correlation Between Sentinel Mon and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Sentinel Mon and Touchstone Large 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 Mon and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentinel Mon Stock and Touchstone Large Cap, you can compare the effects of market volatilities on Sentinel Mon and Touchstone Large 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 Mon with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Mon and Touchstone Large.
Diversification Opportunities for Sentinel Mon and Touchstone Large
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sentinel and Touchstone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Mon Stock and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Sentinel Mon 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 Mon Stock are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Sentinel Mon i.e., Sentinel Mon and Touchstone Large go up and down completely randomly.
Pair Corralation between Sentinel Mon and Touchstone Large
Assuming the 90 days horizon Sentinel Mon is expected to generate 1.14 times less return on investment than Touchstone Large. In addition to that, Sentinel Mon is 1.15 times more volatile than Touchstone Large Cap. It trades about 0.14 of its total potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.18 per unit of volatility. If you would invest 1,776 in Touchstone Large Cap on August 28, 2024 and sell it today you would earn a total of 287.00 from holding Touchstone Large Cap or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Mon Stock vs. Touchstone Large Cap
Performance |
| Timeline |
| Sentinel Mon Stock |
| Touchstone Large Cap |
Sentinel Mon and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Mon and Touchstone Large
The main advantage of trading using opposite Sentinel Mon and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Mon position performs unexpectedly, Touchstone Large 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 Large will offset losses from the drop in Touchstone Large's long position.| Sentinel Mon vs. Touchstone Small Cap | Sentinel Mon vs. Touchstone Sands Capital | Sentinel Mon vs. Mid Cap Growth | Sentinel Mon vs. Mid Cap Growth |
| Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Touchstone Sands Capital | Touchstone Large vs. Mid Cap Growth | Touchstone Large 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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