Correlation Between Sentinel Small and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Sentinel Small and Eaton Vance 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 Eaton Vance 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 Eaton Vance Balanced, you can compare the effects of market volatilities on Sentinel Small and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Small and Eaton Vance.

Diversification Opportunities for Sentinel Small and Eaton Vance

0.71

Correlation Coefficient

Sentinel Small  Eaton Vance

Poor diversification

The 3 months correlation between Sentinel and Eaton is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Eaton Vance Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Balanced 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Balanced has no effect on the direction of Sentinel Small i.e., Sentinel Small and Eaton Vance go up and down completely randomly.

Pair Corralation between Sentinel Small and Eaton Vance

Assuming the 90 days horizon Sentinel Small is expected to generate 1.16 times less return on investment than Eaton Vance. In addition to that, Sentinel Small is 1.64 times more volatile than Eaton Vance Balanced. It trades about 0.05 of its total potential returns per unit of risk. Eaton Vance Balanced is currently generating about 0.1 per unit of volatility. If you would invest  893.00  in Eaton Vance Balanced on September 26, 2024 and sell it today you would earn a total of  307.00  from holding Eaton Vance Balanced or generate 34.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Sentinel Small Pany  vs.  Eaton Vance Balanced

Sentinel Small Pany

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Sentinel Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Eaton Vance 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 Eaton Vance

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

The idea behind Sentinel Small Pany and Eaton Vance Balanced 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.