Correlation Between Us Global and Sentinel Low
Can any of the company-specific risk be diversified away by investing in both Us Global and Sentinel Low 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 Us Global and Sentinel Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Global Leaders and Sentinel Low Duration, you can compare the effects of market volatilities on Us Global and Sentinel Low 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 Us Global with a short position of Sentinel Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Global and Sentinel Low.
Diversification Opportunities for Us Global and Sentinel Low
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USGLX and Sentinel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders and Sentinel Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Low Duration and Us Global 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 Us Global Leaders are associated (or correlated) with Sentinel Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Low Duration has no effect on the direction of Us Global i.e., Us Global and Sentinel Low go up and down completely randomly.
Pair Corralation between Us Global and Sentinel Low
Assuming the 90 days horizon Us Global Leaders is expected to generate 9.26 times more return on investment than Sentinel Low. However, Us Global is 9.26 times more volatile than Sentinel Low Duration. It trades about 0.12 of its potential returns per unit of risk. Sentinel Low Duration is currently generating about 0.24 per unit of risk. If you would invest 6,633 in Us Global Leaders on September 3, 2024 and sell it today you would earn a total of 983.00 from holding Us Global Leaders or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Global Leaders vs. Sentinel Low Duration
Performance |
| Timeline |
| Us Global Leaders |
| Sentinel Low Duration |
Us Global and Sentinel Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Global and Sentinel Low
The main advantage of trading using opposite Us Global and Sentinel Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Global position performs unexpectedly, Sentinel Low 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 Low will offset losses from the drop in Sentinel Low's long position.| Us Global vs. Quantitative Longshort Equity | Us Global vs. Barings Active Short | Us Global vs. Calvert Short Duration | Us Global vs. Aqr Long Short Equity |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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