Correlation Between Sentinel Low and Touchstone Total

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

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

Diversification Opportunities for Sentinel Low and Touchstone Total

0.84

Correlation Coefficient

Sentinel Low  Touchstone Total

Very poor diversification

The 3 months correlation between Sentinel and Touchstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Low Duration and Touchstone Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Total Return and Sentinel Low 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 Low Duration are associated (or correlated) with Touchstone Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Total Return has no effect on the direction of Sentinel Low i.e., Sentinel Low and Touchstone Total go up and down completely randomly.

Pair Corralation between Sentinel Low and Touchstone Total

Assuming the 90 days horizon Sentinel Low is expected to generate 2.44 times less return on investment than Touchstone Total. But when comparing it to its historical volatility, Sentinel Low Duration is 2.87 times less risky than Touchstone Total. It trades about 0.19 of its potential returns per unit of risk. Touchstone Total Return is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  882.00  in Touchstone Total Return on December 24, 2024 and sell it today you would earn a total of  26.00  from holding Touchstone Total Return or generate 2.95% return on investment over 90 days.

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

Sentinel Low Duration  vs.  Touchstone Total Return

Sentinel Low Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Low Duration are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sentinel Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Total Return are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone 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 Low and Touchstone Total

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

The idea behind Sentinel Low Duration and Touchstone 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.