Correlation Between Growth Opportunities and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities 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 Growth Opportunities and Sentinel Small 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 Small, you can compare the effects of market volatilities on Growth Opportunities 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 Growth Opportunities with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Sentinel Small.
Diversification Opportunities for Growth Opportunities and Sentinel Small
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GROWTH and Sentinel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small 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 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 has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Sentinel Small go up and down completely randomly.
Pair Corralation between Growth Opportunities and Sentinel Small
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 0.98 times more return on investment than Sentinel Small. However, Growth Opportunities Fund is 1.02 times less risky than Sentinel Small. It trades about 0.11 of its potential returns per unit of risk. Sentinel Small is currently generating about 0.08 per unit of risk. If you would invest 3,896 in Growth Opportunities Fund on August 31, 2024 and sell it today you would earn a total of 1,960 from holding Growth Opportunities Fund or generate 50.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Sentinel Small
Performance |
| Timeline |
| Growth Opportunities |
| Sentinel Small |
Growth Opportunities and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Sentinel Small
The main advantage of trading using opposite Growth Opportunities and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities 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.| Growth Opportunities vs. Europacific Growth Fund | Growth Opportunities vs. Washington Mutual Investors | Growth Opportunities vs. Capital World Growth | Growth Opportunities vs. HUMANA INC |
| Sentinel Small vs. American Funds Retirement | Sentinel Small vs. Strategic Allocation Moderate | Sentinel Small vs. Calvert Moderate Allocation | Sentinel Small vs. Wisdomtree Siegel Moderate |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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