Correlation Between Sentinel International and Active Bond

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

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

Diversification Opportunities for Sentinel International and Active Bond

0.49

Correlation Coefficient

Sentinel International  Active Bond

Very weak diversification

The 3 months correlation between Sentinel and Active is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel International Equity and Active Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active Bond Fund and Sentinel International 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 International Equity are associated (or correlated) with Active Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active Bond Fund has no effect on the direction of Sentinel International i.e., Sentinel International and Active Bond go up and down completely randomly.

Pair Corralation between Sentinel International and Active Bond

Assuming the 90 days horizon Sentinel International Equity is expected to under-perform the Active Bond. In addition to that, Sentinel International is 3.58 times more volatile than Active Bond Fund. It trades about -0.16 of its total potential returns per unit of risk. Active Bond Fund is currently generating about -0.14 per unit of volatility. If you would invest  963.00  in Active Bond Fund on September 19, 2024 and sell it today you would lose (25.00) from holding Active Bond Fund or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sentinel International Equity  vs.  Active Bond Fund

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 essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Active Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Active Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Active Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sentinel International and Active Bond

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

The idea behind Sentinel International Equity and Active Bond 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.