Correlation Between Small Cap and Sentinel Common
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Sentinel Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Sentinel Mon Stock, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Sentinel Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Sentinel Common.
Diversification Opportunities for Small Cap and Sentinel Common
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Sentinel is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Sentinel Common go up and down completely randomly.
Pair Corralation between Small Cap and Sentinel Common
Assuming the 90 days horizon Small Cap is expected to generate 1.17 times less return on investment than Sentinel Common. In addition to that, Small Cap is 1.38 times more volatile than Sentinel Mon Stock. It trades about 0.23 of its total potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.36 per unit of volatility. If you would invest 6,447 in Sentinel Mon Stock on April 23, 2025 and sell it today you would earn a total of 1,273 from holding Sentinel Mon Stock or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Sentinel Mon Stock
Performance |
| Timeline |
| Small Cap Stock |
| Sentinel Mon Stock |
Small Cap and Sentinel Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Sentinel Common
The main advantage of trading using opposite Small Cap and Sentinel Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Transamerica High Yield | Small Cap vs. Msift High Yield | Small Cap vs. Jpmorgan High Yield | Small Cap vs. Janus High Yield Fund |
| Sentinel Common vs. Touchstone Small Cap | Sentinel Common vs. Touchstone Sands Capital | Sentinel Common vs. Mid Cap Growth | Sentinel Common vs. Mid Cap Growth |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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