Correlation Between SentinelOne and CVD Equipment

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

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

Diversification Opportunities for SentinelOne and CVD Equipment

-0.59

Correlation Coefficient

SentinelOne  CVD Equipment

Excellent diversification

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

Pair Corralation between SentinelOne and CVD Equipment

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.85 times more return on investment than CVD Equipment. However, SentinelOne is 1.18 times less risky than CVD Equipment. It trades about 0.06 of its potential returns per unit of risk. CVD Equipment is currently generating about 0.01 per unit of risk. If you would invest  1,879  in SentinelOne on September 22, 2024 and sell it today you would earn a total of  364.00  from holding SentinelOne or generate 19.37% return on investment over 90 days.

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

SentinelOne  vs.  CVD Equipment

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 comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CVD Equipment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVD Equipment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CVD Equipment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and CVD Equipment

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

The idea behind SentinelOne and CVD Equipment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.