Correlation Between Ford and SentinelOne

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

By analyzing existing cross correlation between Ford Motor and SentinelOne, you can compare the effects of market volatilities on Ford and SentinelOne 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 Ford with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SentinelOne.

Diversification Opportunities for Ford and SentinelOne

-0.46

Correlation Coefficient

Ford  SentinelOne

Very good diversification

The 3 months correlation between Ford and SentinelOne is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Ford 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 Ford Motor are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Ford i.e., Ford and SentinelOne go up and down completely randomly.

Pair Corralation between Ford and SentinelOne

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SentinelOne. In addition to that, Ford is 1.04 times more volatile than SentinelOne. It trades about -0.16 of its total potential returns per unit of risk. SentinelOne is currently generating about -0.16 per unit of volatility. If you would invest  2,301  in SentinelOne on February 1, 2024 and sell it today you would lose (188.00) from holding SentinelOne or give up 8.17% of portfolio value over 90 days.

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

Ford Motor  vs.  SentinelOne

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ford and SentinelOne

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

The idea behind Ford Motor and SentinelOne 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.