Correlation Between SentinelOne and Allot Communications

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

By analyzing existing cross correlation between SentinelOne and Allot Communications, you can compare the effects of market volatilities on SentinelOne and Allot Communications 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 Allot Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Allot Communications.

Diversification Opportunities for SentinelOne and Allot Communications

-0.6

Correlation Coefficient

SentinelOne  Allot Communications

Excellent diversification

The 3 months correlation between SentinelOne and Allot is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications 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 Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of SentinelOne i.e., SentinelOne and Allot Communications go up and down completely randomly.

Pair Corralation between SentinelOne and Allot Communications

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Allot Communications. In addition to that, SentinelOne is 1.38 times more volatile than Allot Communications. It trades about -0.13 of its total potential returns per unit of risk. Allot Communications is currently generating about 0.02 per unit of volatility. If you would invest  206.00  in Allot Communications on February 3, 2024 and sell it today you would earn a total of  2.00  from holding Allot Communications or generate 0.97% return on investment over 90 days.

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

SentinelOne  vs.  Allot Communications

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.

Allot Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Allot Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Allot Communications

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

The idea behind SentinelOne and Allot Communications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.