Correlation Between Sentinel Small and Sentinel International

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

Diversification Opportunities for Sentinel Small and Sentinel International

-0.33

Correlation Coefficient

Sentinel Small  Sentinel International

Very good diversification

The 3 months correlation between Sentinel and Sentinel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Sentinel International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel International 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 Sentinel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel International has no effect on the direction of Sentinel Small i.e., Sentinel Small and Sentinel International go up and down completely randomly.

Pair Corralation between Sentinel Small and Sentinel International

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.31 times more return on investment than Sentinel International. However, Sentinel Small is 1.31 times more volatile than Sentinel International Equity. It trades about 0.04 of its potential returns per unit of risk. Sentinel International Equity is currently generating about 0.0 per unit of risk. If you would invest  507.00  in Sentinel Small Pany on September 19, 2024 and sell it today you would earn a total of  99.00  from holding Sentinel Small Pany or generate 19.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Sentinel Small Pany  vs.  Sentinel International Equity

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.

Sentinel International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentinel International Equity 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.

Pair Trading with Sentinel Small and Sentinel International

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

The idea behind Sentinel Small Pany and Sentinel International 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 Transaction History module to view history of all your transactions and understand their impact on performance.