Correlation Between Simt Large and Sentinel Balanced

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

By analyzing existing cross correlation between Simt Large Cap and Sentinel Balanced Fund, you can compare the effects of market volatilities on Simt Large and Sentinel Balanced 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 Simt Large with a short position of Sentinel Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Large and Sentinel Balanced.

Diversification Opportunities for Simt Large and Sentinel Balanced

0.79

Correlation Coefficient

Simt Large  Sentinel Balanced

Poor diversification

The 3 months correlation between Simt and Sentinel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Sentinel Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Balanced and Simt Large 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 Simt Large Cap are associated (or correlated) with Sentinel Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Balanced has no effect on the direction of Simt Large i.e., Simt Large and Sentinel Balanced go up and down completely randomly.

Pair Corralation between Simt Large and Sentinel Balanced

Assuming the 90 days horizon Simt Large Cap is expected to under-perform the Sentinel Balanced. In addition to that, Simt Large is 3.75 times more volatile than Sentinel Balanced Fund. It trades about -0.01 of its total potential returns per unit of risk. Sentinel Balanced Fund is currently generating about 0.12 per unit of volatility. If you would invest  2,661  in Sentinel Balanced Fund on September 19, 2024 and sell it today you would earn a total of  201.00  from holding Sentinel Balanced Fund or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Simt Large Cap  vs.  Sentinel Balanced Fund

Simt Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Sentinel Balanced

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Simt Large and Sentinel Balanced

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

The idea behind Simt Large Cap and Sentinel Balanced Fund 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.