Correlation Between Sentinel Small and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Touchstone Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Sentinel Small and Touchstone Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Touchstone Small.
Diversification Opportunities for Sentinel Small and Touchstone Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sentinel and Touchstone is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Sentinel Small i.e., Sentinel Small and Touchstone Small go up and down completely randomly.
Pair Corralation between Sentinel Small and Touchstone Small
Assuming the 90 days horizon Sentinel Small is expected to generate 0.98 times more return on investment than Touchstone Small. However, Sentinel Small is 1.02 times less risky than Touchstone Small. It trades about 0.04 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.03 per unit of risk. If you would invest 548.00 in Sentinel Small on November 5, 2024 and sell it today you would earn a total of 118.00 from holding Sentinel Small or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel Small vs. Touchstone Small Cap
Performance |
| Timeline |
| Sentinel Small |
| Touchstone Small Cap |
Sentinel Small and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel Small and Touchstone Small
The main advantage of trading using opposite Sentinel Small and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small position performs unexpectedly, Touchstone Small 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 Small will offset losses from the drop in Touchstone Small's long position.| Sentinel Small vs. Jpmorgan Diversified Fund | Sentinel Small vs. Jhancock Diversified Macro | Sentinel Small vs. Federated Hermes Conservative | Sentinel Small vs. Wilmington Diversified Income |
| Touchstone Small vs. Rational Dividend Capture | Touchstone Small vs. Ffcdax | Touchstone Small vs. Fkhemx | Touchstone Small vs. Small Pany Growth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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