Correlation Between Optimum Fixed and Sentinel Small

Can any of the company-specific risk be diversified away by investing in both Optimum Fixed 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 Optimum Fixed and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Optimum Fixed Income and Sentinel Small Pany, you can compare the effects of market volatilities on Optimum Fixed 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 Optimum Fixed with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Fixed and Sentinel Small.

Diversification Opportunities for Optimum Fixed and Sentinel Small

-0.55

Correlation Coefficient

Optimum Fixed  Sentinel Small

Excellent diversification

The 3 months correlation between Optimum and Sentinel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Fixed Income 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 Optimum Fixed 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 Optimum Fixed Income 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 Optimum Fixed i.e., Optimum Fixed and Sentinel Small go up and down completely randomly.

Pair Corralation between Optimum Fixed and Sentinel Small

Assuming the 90 days horizon Optimum Fixed Income is expected to under-perform the Sentinel Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Optimum Fixed Income is 3.4 times less risky than Sentinel Small. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Sentinel Small Pany is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  704.00  in Sentinel Small Pany on September 4, 2024 and sell it today you would earn a total of  76.00  from holding Sentinel Small Pany or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Optimum Fixed Income  vs.  Sentinel Small Pany

Optimum Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optimum Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Optimum Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sentinel Small Pany

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Small Pany are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sentinel Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Optimum Fixed and Sentinel Small

The main advantage of trading using opposite Optimum Fixed and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Fixed 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.

The idea behind Optimum Fixed Income and Sentinel Small Pany 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.