Correlation Between Sentinel International and Sentinel Small

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

Diversification Opportunities for Sentinel International and Sentinel Small

0.88

Correlation Coefficient

Sentinel International  Sentinel Small

Very poor diversification

The 3 months correlation between Sentinel and Sentinel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel International Equity and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small has no effect on the direction of Sentinel International i.e., Sentinel International and Sentinel Small go up and down completely randomly.

Pair Corralation between Sentinel International and Sentinel Small

Assuming the 90 days horizon Sentinel International Equity is expected to generate 0.69 times more return on investment than Sentinel Small. However, Sentinel International Equity is 1.45 times less risky than Sentinel Small. It trades about 0.24 of its potential returns per unit of risk. Sentinel Small is currently generating about 0.13 per unit of risk. If you would invest  1,661  in Sentinel International Equity on May 2, 2025 and sell it today you would earn a total of  172.00  from holding Sentinel International Equity or generate 10.36% return on investment over 90 days.

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

Sentinel International Equity  vs.  Sentinel Small

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 18 (%) 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 August 2025.

Sentinel Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sentinel Small may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sentinel International and Sentinel Small

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

The idea behind Sentinel International Equity and Sentinel Small 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.