Correlation Between SentinelOne and First Financial

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

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

Diversification Opportunities for SentinelOne and First Financial

0.38

Correlation Coefficient

SentinelOne  First Financial

Weak diversification

The 3 months correlation between SentinelOne and First is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and First Financial Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bank 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bank has no effect on the direction of SentinelOne i.e., SentinelOne and First Financial go up and down completely randomly.

Pair Corralation between SentinelOne and First Financial

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.98 times more return on investment than First Financial. However, SentinelOne is 1.98 times more volatile than First Financial Bankshares. It trades about 0.02 of its potential returns per unit of risk. First Financial Bankshares is currently generating about -0.01 per unit of risk. If you would invest  2,404  in SentinelOne on February 10, 2024 and sell it today you would lose (293.00) from holding SentinelOne or give up 12.19% of portfolio value over 90 days.

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

SentinelOne  vs.  First Financial Bankshares

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 uncertain 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.

First Financial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Financial Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, First Financial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and First Financial

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

The idea behind SentinelOne and First Financial Bankshares 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.