Correlation Between Touchstone Small and Sentinel Common

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

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

Diversification Opportunities for Touchstone Small and Sentinel Common

0.42

Correlation Coefficient

Touchstone Small  Sentinel Common

Very weak diversification

The 3 months correlation between TOUCHSTONE and Sentinel is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Pany 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 Touchstone Small 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 Touchstone Small Pany 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 Touchstone Small i.e., Touchstone Small and Sentinel Common go up and down completely randomly.

Pair Corralation between Touchstone Small and Sentinel Common

Assuming the 90 days horizon Touchstone Small is expected to generate 1.43 times less return on investment than Sentinel Common. In addition to that, Touchstone Small is 1.27 times more volatile than Sentinel Mon Stock. It trades about 0.19 of its total potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.35 per unit of volatility. If you would invest  5,727  in Sentinel Mon Stock on April 23, 2025 and sell it today you would earn a total of  1,093  from holding Sentinel Mon Stock or generate 19.09% return on investment over 90 days.

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

Touchstone Small Pany  vs.  Sentinel Mon Stock

Touchstone Small Pany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Pany are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Small showed solid returns over the last few months and may actually be approaching a breakup point.

Sentinel Mon Stock

Risk-Adjusted Performance

Strong

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

Pair Trading with Touchstone Small and Sentinel Common

The main advantage of trading using opposite Touchstone Small and Sentinel Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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 Touchstone Small Pany 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.