Correlation Between Sentinel Small and Fidelity Series

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

Diversification Opportunities for Sentinel Small and Fidelity Series

0.4

Correlation Coefficient

Sentinel Small  Fidelity Series

Very weak diversification

The 3 months correlation between Sentinel and Fidelity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove 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 Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of Sentinel Small i.e., Sentinel Small and Fidelity Series go up and down completely randomly.

Pair Corralation between Sentinel Small and Fidelity Series

Assuming the 90 days horizon Sentinel Small Pany is expected to under-perform the Fidelity Series. In addition to that, Sentinel Small is 3.1 times more volatile than Fidelity Series Government. It trades about -0.36 of its total potential returns per unit of risk. Fidelity Series Government is currently generating about 0.3 per unit of volatility. If you would invest  903.00  in Fidelity Series Government on December 2, 2024 and sell it today you would earn a total of  17.00  from holding Fidelity Series Government or generate 1.88% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Fidelity Series Government

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.

Fidelity Series Gove

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Government are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Series 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 Fidelity Series

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

The idea behind Sentinel Small Pany and Fidelity Series Government 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.