Correlation Between Sentinel Small and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Sentinel Small 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 Small 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 Small and Touchstone Large Cap, you can compare the effects of market volatilities on Sentinel Small 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 Small with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Touchstone Large.
Diversification Opportunities for Sentinel Small and Touchstone Large
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sentinel and Touchstone is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small 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 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 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 Small i.e., Sentinel Small and Touchstone Large go up and down completely randomly.
Pair Corralation between Sentinel Small and Touchstone Large
Assuming the 90 days horizon Sentinel Small is expected to under-perform the Touchstone Large. In addition to that, Sentinel Small is 1.5 times more volatile than Touchstone Large Cap. It trades about -0.38 of its total potential returns per unit of risk. Touchstone Large Cap is currently generating about -0.37 per unit of volatility. If you would invest 2,074 in Touchstone Large Cap on October 10, 2024 and sell it today you would lose (142.00) from holding Touchstone Large Cap or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Small vs. Touchstone Large Cap
Performance |
| Timeline |
| Sentinel Small |
| Touchstone Large Cap |
Sentinel Small and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Touchstone Large
The main advantage of trading using opposite Sentinel Small and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small 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 Small vs. Absolute Convertible Arbitrage | Sentinel Small vs. Fidelity Vertible Securities | Sentinel Small vs. Mainstay Vertible Fund | Sentinel Small vs. Virtus Convertible |
| Touchstone Large vs. Artisan Global Opportunities | Touchstone Large vs. Asg Global Alternatives | Touchstone Large vs. Wisdomtree Siegel Global | Touchstone Large vs. Ab Global Bond |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance |