Correlation Between Federated Strategic and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Sentinel 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 Federated Strategic and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Value and Sentinel Small Pany, you can compare the effects of market volatilities on Federated Strategic and Sentinel 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 Federated Strategic with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Sentinel Small.
Diversification Opportunities for Federated Strategic and Sentinel Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Sentinel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Value and Sentinel Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small Pany and Federated Strategic 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 Federated Strategic Value are associated (or correlated) with Sentinel Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small Pany has no effect on the direction of Federated Strategic i.e., Federated Strategic and Sentinel Small go up and down completely randomly.
Pair Corralation between Federated Strategic and Sentinel Small
Assuming the 90 days horizon Federated Strategic is expected to generate 4.18 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, Federated Strategic Value is 2.74 times less risky than Sentinel Small. It trades about 0.2 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 713.00 in Sentinel Small Pany on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Sentinel Small Pany or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Strategic Value vs. Sentinel Small Pany
Performance |
| Timeline |
| Federated Strategic Value |
| Sentinel Small Pany |
Federated Strategic and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Sentinel Small
The main advantage of trading using opposite Federated Strategic and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Sentinel 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 Sentinel Small will offset losses from the drop in Sentinel Small's long position.| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic vs. Federated Global Allocation |
| Sentinel Small vs. Touchstone Small Cap | Sentinel Small vs. Touchstone Sands Capital | Sentinel Small vs. Mid Cap Growth | Sentinel Small vs. Mid Cap 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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