Correlation Between Sentinel Common and Siit Dynamic

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

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

Diversification Opportunities for Sentinel Common and Siit Dynamic

0.22

Correlation Coefficient

Sentinel Common  Siit Dynamic

Modest diversification

The 3 months correlation between Sentinel and Siit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Mon Stock and Siit Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Dynamic Asset and Sentinel Common 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 Mon Stock are associated (or correlated) with Siit Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Dynamic Asset has no effect on the direction of Sentinel Common i.e., Sentinel Common and Siit Dynamic go up and down completely randomly.

Pair Corralation between Sentinel Common and Siit Dynamic

Assuming the 90 days horizon Sentinel Mon Stock is expected to generate 0.5 times more return on investment than Siit Dynamic. However, Sentinel Mon Stock is 2.0 times less risky than Siit Dynamic. It trades about 0.11 of its potential returns per unit of risk. Siit Dynamic Asset is currently generating about 0.02 per unit of risk. If you would invest  4,405  in Sentinel Mon Stock on December 3, 2024 and sell it today you would earn a total of  2,047  from holding Sentinel Mon Stock or generate 46.47% return on investment over 90 days.

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

Sentinel Mon Stock  vs.  Siit Dynamic Asset

Sentinel Mon Stock

Risk-Adjusted Performance

Very Weak

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

Siit Dynamic Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siit Dynamic Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Sentinel Common and Siit Dynamic

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

The idea behind Sentinel Mon Stock and Siit Dynamic Asset 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.