Correlation Between Sentinel Small and Us Strategic

Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Us Strategic 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 Us Strategic 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 Us Strategic Equity, you can compare the effects of market volatilities on Sentinel Small and Us Strategic 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 Us Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Us Strategic.

Diversification Opportunities for Sentinel Small and Us Strategic

0.9

Correlation Coefficient

Sentinel Small  Us Strategic

Almost no diversification

The 3 months correlation between Sentinel and RSECX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity 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 Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of Sentinel Small i.e., Sentinel Small and Us Strategic go up and down completely randomly.

Pair Corralation between Sentinel Small and Us Strategic

Assuming the 90 days horizon Sentinel Small is expected to generate 3.08 times less return on investment than Us Strategic. In addition to that, Sentinel Small is 1.62 times more volatile than Us Strategic Equity. It trades about 0.03 of its total potential returns per unit of risk. Us Strategic Equity is currently generating about 0.16 per unit of volatility. If you would invest  1,710  in Us Strategic Equity on September 16, 2024 and sell it today you would earn a total of  125.00  from holding Us Strategic Equity or generate 7.31% 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.  Us Strategic Equity

Sentinel Small Pany

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Small Pany are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sentinel Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Strategic Equity

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Sentinel Small and Us Strategic

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

The idea behind Sentinel Small Pany and Us Strategic 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.