Correlation Between Sentinel Small and Nationwide Growth

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

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

Diversification Opportunities for Sentinel Small and Nationwide Growth

0.91

Correlation Coefficient

Sentinel Small  Nationwide Growth

Almost no diversification

The 3 months correlation between Sentinel and Nationwide is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth and Sentinel Small 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 Small Pany are associated (or correlated) with Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Sentinel Small i.e., Sentinel Small and Nationwide Growth go up and down completely randomly.

Pair Corralation between Sentinel Small and Nationwide Growth

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.47 times more return on investment than Nationwide Growth. However, Sentinel Small is 1.47 times more volatile than Nationwide Growth Fund. It trades about 0.16 of its potential returns per unit of risk. Nationwide Growth Fund is currently generating about 0.18 per unit of risk. If you would invest  707.00  in Sentinel Small Pany on September 3, 2024 and sell it today you would earn a total of  73.00  from holding Sentinel Small Pany or generate 10.33% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Nationwide Growth Fund

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.

Nationwide Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sentinel Small and Nationwide Growth

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

The idea behind Sentinel Small Pany and Nationwide Growth 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.