Correlation Between Sentinel Small and Columbia Total

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

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

Diversification Opportunities for Sentinel Small and Columbia Total

0.34

Correlation Coefficient

Sentinel Small  Columbia Total

Weak diversification

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

Pair Corralation between Sentinel Small and Columbia Total

Assuming the 90 days horizon Sentinel Small Pany is expected to under-perform the Columbia Total. In addition to that, Sentinel Small is 3.06 times more volatile than Columbia Total Return. It trades about -0.21 of its total potential returns per unit of risk. Columbia Total Return is currently generating about 0.06 per unit of volatility. If you would invest  2,113  in Columbia Total Return on December 5, 2024 and sell it today you would earn a total of  24.00  from holding Columbia Total Return or generate 1.14% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Columbia Total Return

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 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.

Columbia Total Return

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Total Return are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Columbia Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sentinel Small and Columbia Total

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

The idea behind Sentinel Small Pany and Columbia Total Return 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.