Correlation Between Sentinel Small and Rainier International

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

Diversification Opportunities for Sentinel Small and Rainier International

-0.32

Correlation Coefficient

Sentinel Small  Rainier International

Very good diversification

The 3 months correlation between Sentinel and Rainier is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany and Rainier International Discover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainier International 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 Rainier International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainier International has no effect on the direction of Sentinel Small i.e., Sentinel Small and Rainier International go up and down completely randomly.

Pair Corralation between Sentinel Small and Rainier International

Assuming the 90 days horizon Sentinel Small Pany is expected to generate 1.41 times more return on investment than Rainier International. However, Sentinel Small is 1.41 times more volatile than Rainier International Discovery. It trades about 0.2 of its potential returns per unit of risk. Rainier International Discovery is currently generating about 0.06 per unit of risk. If you would invest  687.00  in Sentinel Small Pany on September 6, 2024 and sell it today you would earn a total of  91.00  from holding Sentinel Small Pany or generate 13.25% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Rainier International Discover

Sentinel Small Pany

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Small Pany are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sentinel Small showed solid returns over the last few months and may actually be approaching a breakup point.

Rainier International

Risk-Adjusted Performance

4 of 100

Weak

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

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

The idea behind Sentinel Small Pany and Rainier International Discovery 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.