Correlation Between Touchstone Sands and Sentinel Mon

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

By analyzing existing cross correlation between Touchstone Sands Capital and Sentinel Mon Stock, you can compare the effects of market volatilities on Touchstone Sands and Sentinel Mon 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 Touchstone Sands with a short position of Sentinel Mon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Sentinel Mon.

Diversification Opportunities for Touchstone Sands and Sentinel Mon

-0.65

Correlation Coefficient

Touchstone Sands  Sentinel Mon

Excellent diversification

The 3 months correlation between Touchstone and Sentinel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and Touchstone Sands 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 Touchstone Sands Capital are associated (or correlated) with Sentinel Mon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Sentinel Mon go up and down completely randomly.

Pair Corralation between Touchstone Sands and Sentinel Mon

Assuming the 90 days horizon Touchstone Sands Capital is expected to under-perform the Sentinel Mon. In addition to that, Touchstone Sands is 1.49 times more volatile than Sentinel Mon Stock. It trades about -0.11 of its total potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.13 per unit of volatility. If you would invest  6,974  in Sentinel Mon Stock on September 19, 2024 and sell it today you would earn a total of  358.00  from holding Sentinel Mon Stock or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Touchstone Sands Capital  vs.  Sentinel Mon Stock

Touchstone Sands Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sentinel Mon Stock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Sentinel Mon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Touchstone Sands and Sentinel Mon

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

The idea behind Touchstone Sands Capital and Sentinel Mon Stock 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.