Correlation Between Acm Dynamic and Sentinel Small

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

By analyzing existing cross correlation between Acm Dynamic Opportunity and Sentinel Small Pany, you can compare the effects of market volatilities on Acm Dynamic and Sentinel Small 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 Acm Dynamic with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acm Dynamic and Sentinel Small.

Diversification Opportunities for Acm Dynamic and Sentinel Small

0.34

Correlation Coefficient

Acm Dynamic  Sentinel Small

Weak diversification

The 3 months correlation between Acm and Sentinel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Acm Dynamic Opportunity and Sentinel Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small Pany and Acm Dynamic 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 Acm Dynamic Opportunity are associated (or correlated) with Sentinel Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small Pany has no effect on the direction of Acm Dynamic i.e., Acm Dynamic and Sentinel Small go up and down completely randomly.

Pair Corralation between Acm Dynamic and Sentinel Small

Assuming the 90 days horizon Acm Dynamic Opportunity is expected to under-perform the Sentinel Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Acm Dynamic Opportunity is 1.09 times less risky than Sentinel Small. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Sentinel Small Pany is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  694.00  in Sentinel Small Pany on December 28, 2024 and sell it today you would lose (32.00) from holding Sentinel Small Pany or give up 4.61% of portfolio value over 90 days.

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

Acm Dynamic Opportunity  vs.  Sentinel Small Pany

Acm Dynamic Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acm Dynamic Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Sentinel Small Pany

Risk-Adjusted Performance

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.

Pair Trading with Acm Dynamic and Sentinel Small

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

The idea behind Acm Dynamic Opportunity and Sentinel Small Pany 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.