Correlation Between SentinelOne and Fortum Oyj

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

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

Diversification Opportunities for SentinelOne and Fortum Oyj

0.19

Correlation Coefficient

SentinelOne  Fortum Oyj

Average diversification

The 3 months correlation between SentinelOne and Fortum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of SentinelOne i.e., SentinelOne and Fortum Oyj go up and down completely randomly.

Pair Corralation between SentinelOne and Fortum Oyj

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.59 times more return on investment than Fortum Oyj. However, SentinelOne is 1.59 times more volatile than Fortum Oyj. It trades about 0.12 of its potential returns per unit of risk. Fortum Oyj is currently generating about 0.03 per unit of risk. If you would invest  2,356  in SentinelOne on August 30, 2024 and sell it today you would earn a total of  452.00  from holding SentinelOne or generate 19.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SentinelOne  vs.  Fortum Oyj

SentinelOne

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fortum Oyj

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortum Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fortum Oyj is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SentinelOne and Fortum Oyj

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

The idea behind SentinelOne and Fortum Oyj 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.