Correlation Between Sentinel Mon and Invesco Disciplined

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

By analyzing existing cross correlation between Sentinel Mon Stock and Invesco Disciplined Equity, you can compare the effects of market volatilities on Sentinel Mon and Invesco Disciplined 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 Sentinel Mon with a short position of Invesco Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Mon and Invesco Disciplined.

Diversification Opportunities for Sentinel Mon and Invesco Disciplined

0.99

Correlation Coefficient

Sentinel Mon  Invesco Disciplined

No risk reduction

The 3 months correlation between Sentinel and Invesco is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Mon Stock and Invesco Disciplined Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Disciplined and Sentinel Mon 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 Sentinel Mon Stock are associated (or correlated) with Invesco Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Disciplined has no effect on the direction of Sentinel Mon i.e., Sentinel Mon and Invesco Disciplined go up and down completely randomly.

Pair Corralation between Sentinel Mon and Invesco Disciplined

Assuming the 90 days horizon Sentinel Mon Stock is expected to generate 0.97 times more return on investment than Invesco Disciplined. However, Sentinel Mon Stock is 1.03 times less risky than Invesco Disciplined. It trades about 0.08 of its potential returns per unit of risk. Invesco Disciplined Equity is currently generating about 0.06 per unit of risk. If you would invest  6,204  in Sentinel Mon Stock on September 24, 2024 and sell it today you would earn a total of  210.00  from holding Sentinel Mon Stock or generate 3.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Sentinel Mon Stock  vs.  Invesco Disciplined Equity

Sentinel Mon Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Sentinel Mon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Disciplined

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Disciplined Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Invesco Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sentinel Mon and Invesco Disciplined

The main advantage of trading using opposite Sentinel Mon and Invesco Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Mon position performs unexpectedly, Invesco Disciplined 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 Invesco Disciplined will offset losses from the drop in Invesco Disciplined's long position.

The idea behind Sentinel Mon Stock and Invesco Disciplined Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.