Correlation Between Sentinel Multi and Sterling Capital

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

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

Diversification Opportunities for Sentinel Multi and Sterling Capital

0.84

Correlation Coefficient

Sentinel Multi  Sterling Capital

Very poor diversification

The 3 months correlation between Sentinel and Sterling is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Multi Asset Income and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity and Sentinel Multi 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 Multi Asset Income are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Equity has no effect on the direction of Sentinel Multi i.e., Sentinel Multi and Sterling Capital go up and down completely randomly.

Pair Corralation between Sentinel Multi and Sterling Capital

Assuming the 90 days horizon Sentinel Multi Asset Income is expected to generate 0.94 times more return on investment than Sterling Capital. However, Sentinel Multi Asset Income is 1.07 times less risky than Sterling Capital. It trades about -0.08 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about -0.12 per unit of risk. If you would invest  4,790  in Sentinel Multi Asset Income on September 17, 2024 and sell it today you would lose (648.00) from holding Sentinel Multi Asset Income or give up 13.53% of portfolio value over 90 days.

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

Sentinel Multi Asset Income  vs.  Sterling Capital Equity

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.

Sterling Capital Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Equity 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Sentinel Multi and Sterling Capital

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

The idea behind Sentinel Multi Asset Income and Sterling Capital Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.