Correlation Between Technology Select and SentinelOne
Can any of the company-specific risk be diversified away by investing in both Technology Select and SentinelOne 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 Technology Select and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and SentinelOne, you can compare the effects of market volatilities on Technology Select and SentinelOne 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 Technology Select with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and SentinelOne.
Diversification Opportunities for Technology Select and SentinelOne
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Technology and SentinelOne is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Technology Select 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 Technology Select Sector are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Technology Select i.e., Technology Select and SentinelOne go up and down completely randomly.
Pair Corralation between Technology Select and SentinelOne
Considering the 90-day investment horizon Technology Select Sector is expected to generate 0.46 times more return on investment than SentinelOne. However, Technology Select Sector is 2.15 times less risky than SentinelOne. It trades about -0.16 of its potential returns per unit of risk. SentinelOne is currently generating about -0.21 per unit of risk. If you would invest 20,630 in Technology Select Sector on January 18, 2024 and sell it today you would lose (745.00) from holding Technology Select Sector or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Technology Select Sector vs. SentinelOne
Performance |
| Timeline |
| Technology Select Sector |
| SentinelOne |
Technology Select and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and SentinelOne
The main advantage of trading using opposite Technology Select and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, SentinelOne 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 SentinelOne will offset losses from the drop in SentinelOne's long position.| Technology Select vs. Financial Select Sector | Technology Select vs. Consumer Discretionary Select | Technology Select vs. Industrial Select Sector |
| SentinelOne vs. Cloudflare | SentinelOne vs. Okta Inc | SentinelOne vs. Adobe Systems Incorporated | SentinelOne vs. Nutanix |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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