Correlation Between Sentinel Small and Short Precious

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

Diversification Opportunities for Sentinel Small and Short Precious

0.32

Correlation Coefficient

Sentinel Small  Short Precious

Weak diversification

The 3 months correlation between Sentinel and Short is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Sentinel Small i.e., Sentinel Small and Short Precious go up and down completely randomly.

Pair Corralation between Sentinel Small and Short Precious

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 0.57 times more return on investment than Short Precious. However, Sentinel Small Pany is 1.77 times less risky than Short Precious. It trades about 0.05 of its potential returns per unit of risk. Short Precious Metals is currently generating about 0.0 per unit of risk. If you would invest  560.00  in Sentinel Small Pany on September 25, 2024 and sell it today you would earn a total of  139.00  from holding Sentinel Small Pany or generate 24.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Sentinel Small Pany  vs.  Short Precious Metals

Sentinel Small Pany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentinel Small Pany has generated negative risk-adjusted returns adding no value to fund investors. 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.

Short Precious Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentinel Small and Short Precious

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

The idea behind Sentinel Small Pany and Short Precious Metals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.