Correlation Between Sentinel Low and Sentinel International

Can any of the company-specific risk be diversified away by investing in both Sentinel Low 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 Low 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 Low Duration and Sentinel International Equity, you can compare the effects of market volatilities on Sentinel Low 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 Low with a short position of Sentinel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentinel Low and Sentinel International.

Diversification Opportunities for Sentinel Low and Sentinel International

0.93

Correlation Coefficient

Sentinel Low  Sentinel International

Almost no diversification

The 3 months correlation between Sentinel and Sentinel is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Low Duration 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 Low 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 Low Duration 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 Low i.e., Sentinel Low and Sentinel International go up and down completely randomly.

Pair Corralation between Sentinel Low and Sentinel International

Assuming the 90 days horizon Sentinel Low is expected to generate 9.47 times less return on investment than Sentinel International. But when comparing it to its historical volatility, Sentinel Low Duration is 8.13 times less risky than Sentinel International. It trades about 0.17 of its potential returns per unit of risk. Sentinel International Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,503  in Sentinel International Equity on May 3, 2025 and sell it today you would earn a total of  127.00  from holding Sentinel International Equity or generate 8.45% return on investment over 90 days.

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

Sentinel Low Duration  vs.  Sentinel International Equity

Sentinel Low Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Low Duration are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sentinel Low 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel International Equity are ranked lower than 15 (%) 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 September 2025.

Pair Trading with Sentinel Low and Sentinel International

The main advantage of trading using opposite Sentinel Low and Sentinel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Low 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 Low Duration 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.