Correlation Between Sentinel Small and Small Cap
Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Small Cap 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 Small Cap 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 Small Cap Growth, you can compare the effects of market volatilities on Sentinel Small and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Small Cap.
Diversification Opportunities for Sentinel Small and Small Cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sentinel and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Sentinel Small i.e., Sentinel Small and Small Cap go up and down completely randomly.
Pair Corralation between Sentinel Small and Small Cap
Assuming the 90 days horizon Sentinel Small is expected to generate 1.64 times less return on investment than Small Cap. But when comparing it to its historical volatility, Sentinel Small Pany is 1.26 times less risky than Small Cap. It trades about 0.08 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,335 in Small Cap Growth on September 12, 2024 and sell it today you would earn a total of 498.00 from holding Small Cap Growth or generate 37.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sentinel Small Pany vs. Small Cap Growth
Performance |
| Timeline |
| Sentinel Small Pany |
| Small Cap Growth |
Sentinel Small and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Small Cap
The main advantage of trading using opposite Sentinel Small and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Sentinel Small vs. Dana Large Cap | Sentinel Small vs. Transamerica Large Cap | Sentinel Small vs. Avantis Large Cap | Sentinel Small vs. Qs Large Cap |
| Small Cap vs. Wasatch Small Cap | Small Cap vs. Massmutual Premier Diversified | Small Cap vs. Small Cap Stock | Small Cap vs. Sentinel Small Pany |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |