Correlation Between SentinelOne and Capital Income

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

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

Diversification Opportunities for SentinelOne and Capital Income

-0.37

Correlation Coefficient

SentinelOne  Capital Income

Very good diversification

The 3 months correlation between SentinelOne and Capital is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of SentinelOne i.e., SentinelOne and Capital Income go up and down completely randomly.

Pair Corralation between SentinelOne and Capital Income

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Capital Income. In addition to that, SentinelOne is 3.47 times more volatile than Capital Income Builder. It trades about -0.11 of its total potential returns per unit of risk. Capital Income Builder is currently generating about -0.05 per unit of volatility. If you would invest  6,777  in Capital Income Builder on February 7, 2024 and sell it today you would lose (47.00) from holding Capital Income Builder or give up 0.69% of portfolio value over 90 days.

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

SentinelOne  vs.  Capital Income Builder

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.

Capital Income Builder

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Income Builder are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Capital Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Capital Income

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

The idea behind SentinelOne and Capital Income Builder 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.