Correlation Between Sterling Capital and Sentinel Multi

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

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

Diversification Opportunities for Sterling Capital and Sentinel Multi

0.96

Correlation Coefficient

Sterling Capital  Sentinel Multi

Almost no diversification

The 3 months correlation between Sterling and Sentinel is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Special 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 Sterling Capital 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 Sterling Capital Special are associated (or correlated) with Sentinel Multi. 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 Sterling Capital i.e., Sterling Capital and Sentinel Multi go up and down completely randomly.

Pair Corralation between Sterling Capital and Sentinel Multi

Assuming the 90 days horizon Sterling Capital is expected to generate 1.02 times less return on investment than Sentinel Multi. But when comparing it to its historical volatility, Sterling Capital Special is 1.19 times less risky than Sentinel Multi. It trades about 0.26 of its potential returns per unit of risk. Sentinel Multi Asset Income is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,610  in Sentinel Multi Asset Income on April 24, 2025 and sell it today you would earn a total of  520.00  from holding Sentinel Multi Asset Income or generate 14.4% return on investment over 90 days.

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

Sterling Capital Special  vs.  Sentinel Multi Asset Income

Sterling Capital Special

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Special are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Sterling Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Sentinel Multi Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Multi Asset Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Sentinel Multi showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Capital and Sentinel Multi

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

The idea behind Sterling Capital Special 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.