Correlation Between Sentinel International and Sentinel Common

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

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

Diversification Opportunities for Sentinel International and Sentinel Common

0.47

Correlation Coefficient

Sentinel International  Sentinel Common

Very weak diversification

The 3 months correlation between Sentinel and Sentinel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel International Equity and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and Sentinel International 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 International Equity are associated (or correlated) with Sentinel Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Sentinel International i.e., Sentinel International and Sentinel Common go up and down completely randomly.

Pair Corralation between Sentinel International and Sentinel Common

Assuming the 90 days horizon Sentinel International is expected to generate 1.1 times less return on investment than Sentinel Common. But when comparing it to its historical volatility, Sentinel International Equity is 1.17 times less risky than Sentinel Common. It trades about 0.34 of its potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  6,633  in Sentinel Mon Stock on April 25, 2025 and sell it today you would earn a total of  1,101  from holding Sentinel Mon Stock or generate 16.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Sentinel International Equity  vs.  Sentinel Mon Stock

Sentinel International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel International Equity are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Sentinel International showed solid returns over the last few months and may actually be approaching a breakup point.

Sentinel Mon Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Sentinel Common showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentinel International and Sentinel Common

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

The idea behind Sentinel International Equity and Sentinel Mon Stock 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.