Correlation Between Sentinel Small and Spectrum Fund

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

Diversification Opportunities for Sentinel Small and Spectrum Fund

0.91

Correlation Coefficient

Sentinel Small  Spectrum Fund

Almost no diversification

The 3 months correlation between Sentinel and Spectrum is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Spectrum Fund Adviser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Fund Adviser 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 Spectrum Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Fund Adviser has no effect on the direction of Sentinel Small i.e., Sentinel Small and Spectrum Fund go up and down completely randomly.

Pair Corralation between Sentinel Small and Spectrum Fund

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.47 times more return on investment than Spectrum Fund. However, Sentinel Small is 1.47 times more volatile than Spectrum Fund Adviser. It trades about 0.16 of its potential returns per unit of risk. Spectrum Fund Adviser is currently generating about 0.15 per unit of risk. If you would invest  699.00  in Sentinel Small Pany on September 12, 2024 and sell it today you would earn a total of  72.00  from holding Sentinel Small Pany or generate 10.3% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Spectrum Fund Adviser

Sentinel Small Pany

Risk-Adjusted Performance

12 of 100

Good

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

Spectrum Fund Adviser

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Fund Adviser are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Spectrum Fund 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 Small and Spectrum Fund

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

The idea behind Sentinel Small Pany and Spectrum Fund Adviser 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.