Correlation Between Wilmington Large and Sentinel Common

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

By analyzing existing cross correlation between Wilmington Large Cap Strategy and Sentinel Mon Stock, you can compare the effects of market volatilities on Wilmington Large and Sentinel Common 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 Wilmington Large with a short position of Sentinel Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Large and Sentinel Common.

Diversification Opportunities for Wilmington Large and Sentinel Common

0.55

Correlation Coefficient

Wilmington Large  Sentinel Common

Very weak diversification

The 3 months correlation between Wilmington and Sentinel is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Large Cap Strategy and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and Wilmington Large 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 Wilmington Large Cap Strategy are associated (or correlated) with Sentinel Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Wilmington Large i.e., Wilmington Large and Sentinel Common go up and down completely randomly.

Pair Corralation between Wilmington Large and Sentinel Common

Assuming the 90 days horizon Wilmington Large Cap Strategy is expected to under-perform the Sentinel Common. In addition to that, Wilmington Large is 1.4 times more volatile than Sentinel Mon Stock. It trades about -0.04 of its total potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.04 per unit of volatility. If you would invest  7,003  in Sentinel Mon Stock on October 10, 2024 and sell it today you would earn a total of  122.00  from holding Sentinel Mon Stock or generate 1.74% return on investment over 90 days.

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

Wilmington Large Cap Strategy  vs.  Sentinel Mon Stock

Wilmington Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Large Cap Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Wilmington Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sentinel Mon Stock

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sentinel Common is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Large and Sentinel Common

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

The idea behind Wilmington Large Cap Strategy and Sentinel Mon Stock 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.