Correlation Between Sentinel International and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Sentinel International 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 Sentinel International and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentinel International Equity and Sentinel Small Pany, you can compare the effects of market volatilities on Sentinel International 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 Sentinel International with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel International and Sentinel Small.
Diversification Opportunities for Sentinel International and Sentinel Small
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sentinel and Sentinel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel International Equity 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 Sentinel International 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 International Equity 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 Sentinel International i.e., Sentinel International and Sentinel Small go up and down completely randomly.
Pair Corralation between Sentinel International and Sentinel Small
Assuming the 90 days horizon Sentinel International is expected to generate 1.28 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, Sentinel International Equity is 1.18 times less risky than Sentinel Small. It trades about 0.28 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 596.00 in Sentinel Small Pany on November 3, 2024 and sell it today you would earn a total of 34.00 from holding Sentinel Small Pany or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentinel International Equity vs. Sentinel Small Pany
Performance |
| Timeline |
| Sentinel International |
| Sentinel Small Pany |
Sentinel International and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentinel International and Sentinel Small
The main advantage of trading using opposite Sentinel International and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel International 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.| Sentinel International vs. Sentinel Mon Stock | Sentinel International vs. Sentinel Small Pany | Sentinel International vs. Sentinel Balanced Fund | Sentinel International vs. Touchstone Sustainability And |
| Sentinel Small vs. Sentinel Mon Stock | Sentinel Small vs. Sentinel International Equity | Sentinel Small vs. Sentinel Balanced Fund | Sentinel Small vs. Calamos Growth Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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