Correlation Between Transamerica International and Sentinel Common

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Can any of the company-specific risk be diversified away by investing in both Transamerica International and Sentinel Common 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 Transamerica International and Sentinel Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica International Equity and Sentinel Mon Stock, you can compare the effects of market volatilities on Transamerica International and Sentinel Common 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 Transamerica International with a short position of Sentinel Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica International and Sentinel Common.

Diversification Opportunities for Transamerica International and Sentinel Common

TransamericaSENTINELDiversified AwayTransamericaSENTINELDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Transamerica and SENTINEL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica International Equ and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and Transamerica 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 Transamerica International Equity are associated (or correlated) with Sentinel Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Transamerica International i.e., Transamerica International and Sentinel Common go up and down completely randomly.

Pair Corralation between Transamerica International and Sentinel Common

Assuming the 90 days horizon Transamerica International Equity is expected to generate 1.23 times more return on investment than Sentinel Common. However, Transamerica International is 1.23 times more volatile than Sentinel Mon Stock. It trades about 0.28 of its potential returns per unit of risk. Sentinel Mon Stock is currently generating about -0.05 per unit of risk. If you would invest  2,122  in Transamerica International Equity on November 25, 2024 and sell it today you would earn a total of  99.00  from holding Transamerica International Equity or generate 4.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Transamerica International Equ  vs.  Sentinel Mon Stock

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -202468
JavaScript chart by amCharts 3.21.15TRWIX SCRLX
       Timeline  
Transamerica International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica International Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Transamerica International may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2020.52121.52222.5
Sentinel Mon Stock 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Sentinel Common is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb70.57171.57272.57373.57474.5

Transamerica International and Sentinel Common Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.78-2.08-1.38-0.690.00.721.472.222.973.72 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15TRWIX SCRLX
       Returns  

Pair Trading with Transamerica International and Sentinel Common

The main advantage of trading using opposite Transamerica International and Sentinel Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica International position performs unexpectedly, Sentinel Common 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 Common will offset losses from the drop in Sentinel Common's long position.
The idea behind Transamerica International Equity and Sentinel Mon Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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