Correlation Between Ep Emerging and Sentinel Small

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

By analyzing existing cross correlation between Ep Emerging Markets and Sentinel Small, you can compare the effects of market volatilities on Ep Emerging 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 Ep Emerging with a short position of Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Sentinel Small.

Diversification Opportunities for Ep Emerging and Sentinel Small

0.25

Correlation Coefficient

Ep Emerging  Sentinel Small

Modest diversification

The 3 months correlation between EPASX and Sentinel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small and Ep Emerging 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 Ep Emerging Markets 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 has no effect on the direction of Ep Emerging i.e., Ep Emerging and Sentinel Small go up and down completely randomly.

Pair Corralation between Ep Emerging and Sentinel Small

Assuming the 90 days horizon Ep Emerging Markets is expected to generate 0.6 times more return on investment than Sentinel Small. However, Ep Emerging Markets is 1.67 times less risky than Sentinel Small. It trades about 0.01 of its potential returns per unit of risk. Sentinel Small is currently generating about 0.0 per unit of risk. If you would invest  1,190  in Ep Emerging Markets on September 16, 2025 and sell it today you would earn a total of  1.00  from holding Ep Emerging Markets or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ep Emerging Markets  vs.  Sentinel Small

Ep Emerging Markets

Risk-Adjusted Performance

Weakest

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

Sentinel Small

Risk-Adjusted Performance

Weakest

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

Pair Trading with Ep Emerging and Sentinel Small

The main advantage of trading using opposite Ep Emerging and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging 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.

The idea behind Ep Emerging Markets and Sentinel Small 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.