Correlation Between SentinelOne and Caterpillar
Can any of the company-specific risk be diversified away by investing in both SentinelOne and Caterpillar 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 Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Caterpillar, you can compare the effects of market volatilities on SentinelOne and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Caterpillar.
Diversification Opportunities for SentinelOne and Caterpillar
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SentinelOne and Caterpillar is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of SentinelOne i.e., SentinelOne and Caterpillar go up and down completely randomly.
Pair Corralation between SentinelOne and Caterpillar
Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.14 times less return on investment than Caterpillar. In addition to that, SentinelOne is 2.35 times more volatile than Caterpillar. It trades about 0.01 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.07 per unit of volatility. If you would invest 20,579 in Caterpillar on January 26, 2024 and sell it today you would earn a total of 15,773 from holding Caterpillar or generate 76.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SentinelOne vs. Caterpillar
Performance |
| Timeline |
| SentinelOne |
| Caterpillar |
SentinelOne and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and Caterpillar
The main advantage of trading using opposite SentinelOne and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Block Inc | SentinelOne vs. Adobe Systems Incorporated | SentinelOne vs. Cloudflare |
| Caterpillar vs. AGCO Corporation | Caterpillar vs. CNH Industrial NV | Caterpillar vs. NikolaCorp | Caterpillar vs. Deere Company |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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