Correlation Between SentinelOne and Sapiens International

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

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

Diversification Opportunities for SentinelOne and Sapiens International

-0.67

Correlation Coefficient

SentinelOne  Sapiens International

Excellent diversification

The 3 months correlation between SentinelOne and Sapiens is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of SentinelOne i.e., SentinelOne and Sapiens International go up and down completely randomly.

Pair Corralation between SentinelOne and Sapiens International

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.75 times less return on investment than Sapiens International. But when comparing it to its historical volatility, SentinelOne is 1.04 times less risky than Sapiens International. It trades about 0.12 of its potential returns per unit of risk. Sapiens International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,080  in Sapiens International on February 14, 2024 and sell it today you would earn a total of  244.00  from holding Sapiens International or generate 7.92% return on investment over 90 days.

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

SentinelOne  vs.  Sapiens International

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.

Sapiens International

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with SentinelOne and Sapiens International

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

The idea behind SentinelOne and Sapiens International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.