Correlation Between SentinelOne and Virtus LifeSci

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

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

Diversification Opportunities for SentinelOne and Virtus LifeSci

0.41

Correlation Coefficient

SentinelOne  Virtus LifeSci

Very weak diversification

The 3 months correlation between SentinelOne and Virtus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Virtus LifeSci Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus LifeSci Biotech 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 Virtus LifeSci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus LifeSci Biotech has no effect on the direction of SentinelOne i.e., SentinelOne and Virtus LifeSci go up and down completely randomly.

Pair Corralation between SentinelOne and Virtus LifeSci

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Virtus LifeSci. In addition to that, SentinelOne is 1.08 times more volatile than Virtus LifeSci Biotech. It trades about -0.05 of its total potential returns per unit of risk. Virtus LifeSci Biotech is currently generating about 0.08 per unit of volatility. If you would invest  2,704  in Virtus LifeSci Biotech on February 4, 2024 and sell it today you would earn a total of  85.00  from holding Virtus LifeSci Biotech or generate 3.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

SentinelOne  vs.  Virtus LifeSci Biotech

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 unsteady 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.

Virtus LifeSci Biotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus LifeSci Biotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Virtus LifeSci may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with SentinelOne and Virtus LifeSci

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

The idea behind SentinelOne and Virtus LifeSci Biotech 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.