Correlation Between SentinelOne and Transamerica Capital

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

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

Diversification Opportunities for SentinelOne and Transamerica Capital

0.07

Correlation Coefficient

SentinelOne  Transamerica Capital

Significant diversification

The 3 months correlation between SentinelOne and Transamerica is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Transamerica Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Capital 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 Transamerica Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Capital has no effect on the direction of SentinelOne i.e., SentinelOne and Transamerica Capital go up and down completely randomly.

Pair Corralation between SentinelOne and Transamerica Capital

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.64 times more return on investment than Transamerica Capital. However, SentinelOne is 1.64 times more volatile than Transamerica Capital Growth. It trades about -0.05 of its potential returns per unit of risk. Transamerica Capital Growth is currently generating about -0.31 per unit of risk. If you would invest  2,222  in SentinelOne on January 26, 2024 and sell it today you would lose (65.00) from holding SentinelOne or give up 2.93% of portfolio value over 90 days.

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

SentinelOne  vs.  Transamerica Capital Growth

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 May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Transamerica Capital

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Capital Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Transamerica Capital 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 Transamerica Capital

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

The idea behind SentinelOne and Transamerica Capital Growth 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.