Correlation Between Sentinel Small and Washington Mutual

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Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Washington Mutual 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 Washington Mutual 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 Washington Mutual Investors, you can compare the effects of market volatilities on Sentinel Small and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Washington Mutual.

Diversification Opportunities for Sentinel Small and Washington Mutual

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sentinel and Washington is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Sentinel Small i.e., Sentinel Small and Washington Mutual go up and down completely randomly.

Pair Corralation between Sentinel Small and Washington Mutual

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.1 times more return on investment than Washington Mutual. However, Sentinel Small is 1.1 times more volatile than Washington Mutual Investors. It trades about 0.25 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.25 per unit of risk. If you would invest  692.00  in Sentinel Small Pany on October 20, 2024 and sell it today you would earn a total of  27.00  from holding Sentinel Small Pany or generate 3.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sentinel Small Pany  vs.  Washington Mutual Investors

 Performance 
       Timeline  
Sentinel Small Pany 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sentinel Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sentinel Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Washington Mutual 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Washington Mutual Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Washington Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sentinel Small and Washington Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sentinel Small and Washington Mutual

The main advantage of trading using opposite Sentinel Small and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.
The idea behind Sentinel Small Pany and Washington Mutual Investors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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