Correlation Between Sentinel Small and Oppenheimer Main

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

Diversification Opportunities for Sentinel Small and Oppenheimer Main

0.87

Correlation Coefficient

Sentinel Small  Oppenheimer Main

Very poor diversification

The 3 months correlation between Sentinel and Oppenheimer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Oppenheimer Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Main Street 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 Oppenheimer Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Main Street has no effect on the direction of Sentinel Small i.e., Sentinel Small and Oppenheimer Main go up and down completely randomly.

Pair Corralation between Sentinel Small and Oppenheimer Main

Assuming the 90 days horizon Sentinel Small Pany is expected to under-perform the Oppenheimer Main. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sentinel Small Pany is 1.06 times less risky than Oppenheimer Main. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Oppenheimer Main Street is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Oppenheimer Main Street on December 30, 2024 and sell it today you would lose (118.00) from holding Oppenheimer Main Street or give up 5.56% of portfolio value over 90 days.

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

Sentinel Small Pany  vs.  Oppenheimer Main Street

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 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.

Oppenheimer Main Street

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenheimer Main Street has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer Main 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 Oppenheimer Main

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

The idea behind Sentinel Small Pany and Oppenheimer Main Street 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.