Correlation Between Microsoft and Sentinel Multi

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

By analyzing existing cross correlation between Microsoft and Sentinel Multi Asset Income, you can compare the effects of market volatilities on Microsoft and Sentinel Multi 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 Microsoft with a short position of Sentinel Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sentinel Multi.

Diversification Opportunities for Microsoft and Sentinel Multi

-0.3

Correlation Coefficient

Microsoft  Sentinel Multi

Very good diversification

The 3 months correlation between Microsoft and Sentinel is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sentinel Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Multi Asset and Microsoft 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 Microsoft are associated (or correlated) with Sentinel Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Multi Asset has no effect on the direction of Microsoft i.e., Microsoft and Sentinel Multi go up and down completely randomly.

Pair Corralation between Microsoft and Sentinel Multi

Given the investment horizon of 90 days Microsoft is expected to generate 0.22 times more return on investment than Sentinel Multi. However, Microsoft is 4.51 times less risky than Sentinel Multi. It trades about 0.47 of its potential returns per unit of risk. Sentinel Multi Asset Income is currently generating about -0.24 per unit of risk. If you would invest  41,493  in Microsoft on September 17, 2024 and sell it today you would earn a total of  3,666  from holding Microsoft or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  Sentinel Multi Asset Income

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sentinel Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentinel Multi Asset Income 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.

Pair Trading with Microsoft and Sentinel Multi

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

The idea behind Microsoft and Sentinel Multi Asset Income 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.