Correlation Between Sentinel Small and Free Market
Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Free Market 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 Free Market 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 Free Market International, you can compare the effects of market volatilities on Sentinel Small and Free Market 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 Free Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Free Market.
Diversification Opportunities for Sentinel Small and Free Market
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sentinel and Free is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Free Market International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market International 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market International has no effect on the direction of Sentinel Small i.e., Sentinel Small and Free Market go up and down completely randomly.
Pair Corralation between Sentinel Small and Free Market
Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.75 times more return on investment than Free Market. However, Sentinel Small is 1.75 times more volatile than Free Market International. It trades about 0.31 of its potential returns per unit of risk. Free Market International is currently generating about -0.06 per unit of risk. If you would invest 713.00 in Sentinel Small Pany on September 1, 2024 and sell it today you would earn a total of 67.00 from holding Sentinel Small Pany or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Small Pany vs. Free Market International
Performance |
| Timeline |
| Sentinel Small Pany |
| Free Market International |
Sentinel Small and Free Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Free Market
The main advantage of trading using opposite Sentinel Small and Free Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Free Market 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 Free Market will offset losses from the drop in Free Market's long position.| Sentinel Small vs. Touchstone Small Cap | Sentinel Small vs. Touchstone Sands Capital | Sentinel Small vs. Mid Cap Growth | Sentinel Small vs. Mid Cap Growth |
| Free Market vs. Touchstone Ultra Short | Free Market vs. Siit Ultra Short | Free Market vs. Astor Longshort Fund | Free Market vs. Franklin Federal Limited Term |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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