Correlation Between SentinelOne and Acme United

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

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

Diversification Opportunities for SentinelOne and Acme United

0.41

Correlation Coefficient

SentinelOne  Acme United

Very weak diversification

The 3 months correlation between SentinelOne and Acme is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United 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 Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of SentinelOne i.e., SentinelOne and Acme United go up and down completely randomly.

Pair Corralation between SentinelOne and Acme United

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Acme United. In addition to that, SentinelOne is 1.09 times more volatile than Acme United. It trades about -0.11 of its total potential returns per unit of risk. Acme United is currently generating about -0.07 per unit of volatility. If you would invest  4,721  in Acme United on February 19, 2024 and sell it today you would lose (803.00) from holding Acme United or give up 17.01% of portfolio value over 90 days.

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

SentinelOne  vs.  Acme United

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Acme United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acme United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SentinelOne and Acme United

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

The idea behind SentinelOne and Acme United 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.