Correlation Between SentinelOne and Amazon

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

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

Diversification Opportunities for SentinelOne and Amazon

-0.59

Correlation Coefficient

SentinelOne  Amazon

Excellent diversification

The 3 months correlation between SentinelOne and Amazon is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of SentinelOne i.e., SentinelOne and Amazon go up and down completely randomly.

Pair Corralation between SentinelOne and Amazon

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Amazon. In addition to that, SentinelOne is 1.45 times more volatile than Amazon Inc. It trades about -0.11 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.01 per unit of volatility. If you would invest  18,097  in Amazon Inc on January 31, 2024 and sell it today you would lose (1.00) from holding Amazon Inc or give up 0.01% of portfolio value over 90 days.

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

SentinelOne  vs.  Amazon Inc

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 May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Amazon Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Amazon

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

The idea behind SentinelOne and Amazon Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.