Correlation Between Five Below and SentinelOne
Can any of the company-specific risk be diversified away by investing in both Five Below 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 Five Below and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and SentinelOne, you can compare the effects of market volatilities on Five Below 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 Five Below with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and SentinelOne.
Diversification Opportunities for Five Below and SentinelOne
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Five and SentinelOne is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Five Below 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 Five Below 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 Five Below i.e., Five Below and SentinelOne go up and down completely randomly.
Pair Corralation between Five Below and SentinelOne
Given the investment horizon of 90 days Five Below is expected to under-perform the SentinelOne. But the stock apears to be less risky and, when comparing its historical volatility, Five Below is 1.08 times less risky than SentinelOne. The stock trades about -0.37 of its potential returns per unit of risk. The SentinelOne is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 2,248 in SentinelOne on January 24, 2024 and sell it today you would lose (201.00) from holding SentinelOne or give up 8.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Below vs. SentinelOne
Performance |
| Timeline |
| Five Below |
| SentinelOne |
Five Below and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and SentinelOne
The main advantage of trading using opposite Five Below and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below 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.The idea behind Five Below and SentinelOne 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.| SentinelOne vs. Block Inc | SentinelOne vs. Adobe Systems Incorporated | SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Cloudflare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |