Correlation Between Health Care and SentinelOne
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and SentinelOne, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and SentinelOne.
Diversification Opportunities for Health Care and SentinelOne
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Health and SentinelOne is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Health Care 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 Health Care Select 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 Health Care i.e., Health Care and SentinelOne go up and down completely randomly.
Pair Corralation between Health Care and SentinelOne
Considering the 90-day investment horizon Health Care is expected to generate 3.4 times less return on investment than SentinelOne. But when comparing it to its historical volatility, Health Care Select is 5.69 times less risky than SentinelOne. It trades about 0.04 of its potential returns per unit of risk. SentinelOne is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,085 in SentinelOne on January 26, 2024 and sell it today you would earn a total of 72.00 from holding SentinelOne or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Select vs. SentinelOne
Performance |
| Timeline |
| Health Care Select |
| SentinelOne |
Health Care and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and SentinelOne
The main advantage of trading using opposite Health Care and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. iShares Insurance ETF | Health Care vs. SCOR PK | Health Care vs. Morningstar Unconstrained Allocation | Health Care vs. SPACE |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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