Correlation Between Sentinel Small and Prudential High
Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Prudential High 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 Prudential High 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 Prudential High Yield, you can compare the effects of market volatilities on Sentinel Small and Prudential High 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 Prudential High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Prudential High.
Diversification Opportunities for Sentinel Small and Prudential High
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sentinel and Prudential is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield 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 Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Sentinel Small i.e., Sentinel Small and Prudential High go up and down completely randomly.
Pair Corralation between Sentinel Small and Prudential High
Assuming the 90 days horizon Sentinel Small Pany is expected to generate 5.75 times more return on investment than Prudential High. However, Sentinel Small is 5.75 times more volatile than Prudential High Yield. It trades about 0.11 of its potential returns per unit of risk. Prudential High Yield is currently generating about 0.24 per unit of risk. If you would invest 665.00 in Sentinel Small Pany on September 13, 2024 and sell it today you would earn a total of 105.00 from holding Sentinel Small Pany or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Small Pany vs. Prudential High Yield
Performance |
| Timeline |
| Sentinel Small Pany |
| Prudential High Yield |
Sentinel Small and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Prudential High
The main advantage of trading using opposite Sentinel Small and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Prudential High 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 Prudential High will offset losses from the drop in Prudential High's long position.| Sentinel Small vs. Hsbc Treasury Money | Sentinel Small vs. Prudential Government Money | Sentinel Small vs. Aig Government Money | Sentinel Small vs. The Gabelli Money |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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