Correlation Between Madison Covered and Sentinel International

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

By analyzing existing cross correlation between Madison Covered Call and Sentinel International Equity, you can compare the effects of market volatilities on Madison Covered and Sentinel International 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 Madison Covered with a short position of Sentinel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Covered and Sentinel International.

Diversification Opportunities for Madison Covered and Sentinel International

-0.38

Correlation Coefficient

Madison Covered  Sentinel International

Very good diversification

The 3 months correlation between Madison and Sentinel is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Madison Covered Call and Sentinel International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel International and Madison Covered 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 Madison Covered Call are associated (or correlated) with Sentinel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel International has no effect on the direction of Madison Covered i.e., Madison Covered and Sentinel International go up and down completely randomly.

Pair Corralation between Madison Covered and Sentinel International

Considering the 90-day investment horizon Madison Covered Call is expected to under-perform the Sentinel International. In addition to that, Madison Covered is 1.06 times more volatile than Sentinel International Equity. It trades about -0.04 of its total potential returns per unit of risk. Sentinel International Equity is currently generating about 0.18 per unit of volatility. If you would invest  1,766  in Sentinel International Equity on September 12, 2025 and sell it today you would earn a total of  146.00  from holding Sentinel International Equity or generate 8.27% return on investment over 90 days.

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

Madison Covered Call  vs.  Sentinel International Equity

Madison Covered Call

Risk-Adjusted Performance

Weakest

Over the last 90 days Madison Covered Call has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Madison Covered is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sentinel International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel International Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Sentinel International may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Madison Covered and Sentinel International

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

The idea behind Madison Covered Call and Sentinel International Equity 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..