Correlation Between Visa and Sentinel Multi-asset

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

By analyzing existing cross correlation between Visa Class A and Sentinel Multi Asset Income, you can compare the effects of market volatilities on Visa and Sentinel Multi-asset 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 Visa with a short position of Sentinel Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sentinel Multi-asset.

Diversification Opportunities for Visa and Sentinel Multi-asset

-0.28

Correlation Coefficient

Visa  Sentinel Multi-asset

Very good diversification

The 3 months correlation between Visa and Sentinel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sentinel Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Multi Asset and Visa 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 Visa Class A are associated (or correlated) with Sentinel Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Multi Asset has no effect on the direction of Visa i.e., Visa and Sentinel Multi-asset go up and down completely randomly.

Pair Corralation between Visa and Sentinel Multi-asset

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.38 times more return on investment than Sentinel Multi-asset. However, Visa Class A is 2.63 times less risky than Sentinel Multi-asset. It trades about 0.3 of its potential returns per unit of risk. Sentinel Multi Asset Income is currently generating about -0.21 per unit of risk. If you would invest  30,856  in Visa Class A on December 5, 2024 and sell it today you would earn a total of  5,326  from holding Visa Class A or generate 17.26% return on investment over 90 days.

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

Visa Class A  vs.  Sentinel Multi Asset Income

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Sentinel Multi Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sentinel Multi Asset Income 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 forward 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 Visa and Sentinel Multi-asset

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

The idea behind Visa Class A and Sentinel Multi Asset Income 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.