Correlation Between Sentinel Balanced and Sentinel International

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

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

Diversification Opportunities for Sentinel Balanced and Sentinel International

-0.04

Correlation Coefficient

Sentinel Balanced  Sentinel International

Good diversification

The 3 months correlation between Sentinel and Sentinel is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Balanced Fund and Sentinel International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel International and Sentinel Balanced 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 Sentinel Balanced Fund 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 Sentinel Balanced i.e., Sentinel Balanced and Sentinel International go up and down completely randomly.

Pair Corralation between Sentinel Balanced and Sentinel International

Assuming the 90 days horizon Sentinel Balanced Fund is expected to under-perform the Sentinel International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sentinel Balanced Fund is 1.3 times less risky than Sentinel International. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Sentinel International Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,390  in Sentinel International Equity on January 13, 2025 and sell it today you would earn a total of  134.00  from holding Sentinel International Equity or generate 9.64% return on investment over 90 days.

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

Sentinel Balanced Fund  vs.  Sentinel International Equity

Sentinel Balanced

Risk-Adjusted Performance

Very Weak

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

Sentinel International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel International Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Sentinel International may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Sentinel Balanced and Sentinel International

The main advantage of trading using opposite Sentinel Balanced and Sentinel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Balanced 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 Sentinel Balanced Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.