Correlation Between Sentinel Multi-asset and Icon Financial

Can any of the company-specific risk be diversified away by investing in both Sentinel Multi-asset and Icon Financial 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-asset and Icon Financial 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 Icon Financial Fund, you can compare the effects of market volatilities on Sentinel Multi-asset and Icon Financial 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-asset with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Multi-asset and Icon Financial.

Diversification Opportunities for Sentinel Multi-asset and Icon Financial

0.79

Correlation Coefficient

Sentinel Multi-asset  Icon Financial

Poor diversification

The 3 months correlation between Sentinel and Icon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Multi Asset Income and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Sentinel Multi-asset 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 Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Sentinel Multi-asset i.e., Sentinel Multi-asset and Icon Financial go up and down completely randomly.

Pair Corralation between Sentinel Multi-asset and Icon Financial

Assuming the 90 days horizon Sentinel Multi Asset Income is expected to under-perform the Icon Financial. In addition to that, Sentinel Multi-asset is 1.19 times more volatile than Icon Financial Fund. It trades about -0.11 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about -0.08 per unit of volatility. If you would invest  1,091  in Icon Financial Fund on October 26, 2024 and sell it today you would lose (114.00) from holding Icon Financial Fund or give up 10.45% of portfolio value over 90 days.

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

Sentinel Multi Asset Income  vs.  Icon Financial Fund

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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Icon Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Financial Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Sentinel Multi-asset and Icon Financial

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

The idea behind Sentinel Multi Asset Income and Icon Financial Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.