Correlation Between SentinelOne and ACI Worldwide

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

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

Diversification Opportunities for SentinelOne and ACI Worldwide

-0.52

Correlation Coefficient

SentinelOne  ACI Worldwide

Excellent diversification

The 3 months correlation between SentinelOne and ACI is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and ACI Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACI Worldwide and SentinelOne 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 SentinelOne are associated (or correlated) with ACI Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACI Worldwide has no effect on the direction of SentinelOne i.e., SentinelOne and ACI Worldwide go up and down completely randomly.

Pair Corralation between SentinelOne and ACI Worldwide

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.27 times less return on investment than ACI Worldwide. In addition to that, SentinelOne is 1.75 times more volatile than ACI Worldwide. It trades about 0.02 of its total potential returns per unit of risk. ACI Worldwide is currently generating about 0.04 per unit of volatility. If you would invest  2,713  in ACI Worldwide on February 21, 2024 and sell it today you would earn a total of  1,016  from holding ACI Worldwide or generate 37.45% return on investment over 90 days.

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

SentinelOne  vs.  ACI Worldwide

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ACI Worldwide

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ACI Worldwide are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, ACI Worldwide showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and ACI Worldwide

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

The idea behind SentinelOne and ACI Worldwide 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.