Correlation Between T Rowe and Sentinel Small

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

By analyzing existing cross correlation between T Rowe Price and Sentinel Small Pany, you can compare the effects of market volatilities on T Rowe and Sentinel Small 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 T Rowe with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Sentinel Small.

Diversification Opportunities for T Rowe and Sentinel Small

-0.21

Correlation Coefficient

T Rowe  Sentinel Small

Very good diversification

The 3 months correlation between TRLDX and Sentinel is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Sentinel Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small Pany and T Rowe 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 T Rowe Price are associated (or correlated) with Sentinel Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small Pany has no effect on the direction of T Rowe i.e., T Rowe and Sentinel Small go up and down completely randomly.

Pair Corralation between T Rowe and Sentinel Small

Assuming the 90 days horizon T Rowe Price is expected to generate 0.15 times more return on investment than Sentinel Small. However, T Rowe Price is 6.64 times less risky than Sentinel Small. It trades about 0.2 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about -0.19 per unit of risk. If you would invest  463.00  in T Rowe Price on December 2, 2024 and sell it today you would earn a total of  9.00  from holding T Rowe Price or generate 1.94% return on investment over 90 days.

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

T Rowe Price  vs.  Sentinel Small Pany

T Rowe Price

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with T Rowe and Sentinel Small

The main advantage of trading using opposite T Rowe and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Sentinel Small 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 Sentinel Small will offset losses from the drop in Sentinel Small's long position.

The idea behind T Rowe Price and Sentinel Small Pany 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.