Correlation Between Sentinel Common and Touchstone Sands

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

By analyzing existing cross correlation between Sentinel Mon Stock and Touchstone Sands Capital, you can compare the effects of market volatilities on Sentinel Common and Touchstone Sands 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 Common with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Common and Touchstone Sands.

Diversification Opportunities for Sentinel Common and Touchstone Sands

0.92

Correlation Coefficient

Sentinel Common  Touchstone Sands

Almost no diversification

The 3 months correlation between Sentinel and Touchstone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Mon Stock and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Sentinel Common 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 Mon Stock are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Sentinel Common i.e., Sentinel Common and Touchstone Sands go up and down completely randomly.

Pair Corralation between Sentinel Common and Touchstone Sands

Assuming the 90 days horizon Sentinel Mon Stock is expected to generate 0.62 times more return on investment than Touchstone Sands. However, Sentinel Mon Stock is 1.62 times less risky than Touchstone Sands. It trades about -0.18 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about -0.17 per unit of risk. If you would invest  6,422  in Sentinel Mon Stock on January 5, 2025 and sell it today you would lose (948.00) from holding Sentinel Mon Stock or give up 14.76% of portfolio value over 90 days.

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

Sentinel Mon Stock  vs.  Touchstone Sands Capital

Sentinel Mon Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sentinel Mon Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Touchstone Sands Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Sands Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Sentinel Common and Touchstone Sands

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

The idea behind Sentinel Mon Stock and Touchstone Sands Capital 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.