Correlation Between Western Asset and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Sentinel Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Sentinel Small Pany, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sentinel Small.
Diversification Opportunities for Western Asset and Sentinel Small
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Sentinel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified 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 Western Asset 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 Western Asset Diversified 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 Western Asset i.e., Western Asset and Sentinel Small go up and down completely randomly.
Pair Corralation between Western Asset and Sentinel Small
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.26 times more return on investment than Sentinel Small. However, Western Asset Diversified is 3.84 times less risky than Sentinel Small. It trades about -0.02 of its potential returns per unit of risk. Sentinel Small Pany is currently generating about -0.2 per unit of risk. If you would invest 1,535 in Western Asset Diversified on December 1, 2024 and sell it today you would lose (6.00) from holding Western Asset Diversified or give up 0.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Diversified vs. Sentinel Small Pany
Performance |
Timeline |
Western Asset Diversified |
Sentinel Small Pany |
Western Asset and Sentinel Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Sentinel Small
The main advantage of trading using opposite Western Asset and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.Western Asset vs. Msift High Yield | Western Asset vs. Siit High Yield | Western Asset vs. Artisan High Income | Western Asset vs. Barings High Yield |
Sentinel Small vs. Ab Small Cap | Sentinel Small vs. Vulcan Value Partners | Sentinel Small vs. Champlain Small | Sentinel Small vs. Astoncrosswind Small Cap |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |