Correlation Between Growth Opportunities and Sentinel Balanced
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Sentinel Balanced 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 Growth Opportunities and Sentinel Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Sentinel Balanced Fund, you can compare the effects of market volatilities on Growth Opportunities and Sentinel Balanced 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 Growth Opportunities with a short position of Sentinel Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Sentinel Balanced.
Diversification Opportunities for Growth Opportunities and Sentinel Balanced
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Sentinel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Sentinel Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Balanced and Growth Opportunities 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 Growth Opportunities Fund are associated (or correlated) with Sentinel Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Balanced has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Sentinel Balanced go up and down completely randomly.
Pair Corralation between Growth Opportunities and Sentinel Balanced
Assuming the 90 days horizon Growth Opportunities is expected to generate 1.25 times less return on investment than Sentinel Balanced. In addition to that, Growth Opportunities is 2.34 times more volatile than Sentinel Balanced Fund. It trades about 0.08 of its total potential returns per unit of risk. Sentinel Balanced Fund is currently generating about 0.24 per unit of volatility. If you would invest 2,789 in Sentinel Balanced Fund on November 3, 2024 and sell it today you would earn a total of 79.00 from holding Sentinel Balanced Fund or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Sentinel Balanced Fund
Performance |
| Timeline |
| Growth Opportunities |
| Sentinel Balanced |
Growth Opportunities and Sentinel Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Sentinel Balanced
The main advantage of trading using opposite Growth Opportunities and Sentinel Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Sentinel Balanced 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 Balanced will offset losses from the drop in Sentinel Balanced's long position.| Growth Opportunities vs. Qs Moderate Growth | Growth Opportunities vs. Qs Large Cap | Growth Opportunities vs. Rbb Fund | Growth Opportunities vs. Dws Global Macro |
| Sentinel Balanced vs. Sentinel Mon Stock | Sentinel Balanced vs. Sentinel International Equity | Sentinel Balanced vs. Sentinel Small Pany | Sentinel Balanced vs. Sentinel Balanced 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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