Correlation Between SentinelOne and CyberArk Software

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

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

Diversification Opportunities for SentinelOne and CyberArk Software

0.66

Correlation Coefficient

SentinelOne  CyberArk Software

Poor diversification

The 3 months correlation between SentinelOne and CyberArk is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software 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 CyberArk Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberArk Software has no effect on the direction of SentinelOne i.e., SentinelOne and CyberArk Software go up and down completely randomly.

Pair Corralation between SentinelOne and CyberArk Software

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the CyberArk Software. In addition to that, SentinelOne is 1.71 times more volatile than CyberArk Software. It trades about -0.15 of its total potential returns per unit of risk. CyberArk Software is currently generating about -0.04 per unit of volatility. If you would invest  25,915  in CyberArk Software on March 14, 2024 and sell it today you would lose (1,190) from holding CyberArk Software or give up 4.59% of portfolio value over 90 days.

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

SentinelOne  vs.  CyberArk Software

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

CyberArk Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberArk Software has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, CyberArk Software is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SentinelOne and CyberArk Software

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

The idea behind SentinelOne and CyberArk Software 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.