Correlation Between SentinelOne and NetApp

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

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

Diversification Opportunities for SentinelOne and NetApp

-0.65

Correlation Coefficient

SentinelOne  NetApp

Excellent diversification

The 3 months correlation between SentinelOne and NetApp is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of SentinelOne i.e., SentinelOne and NetApp go up and down completely randomly.

Pair Corralation between SentinelOne and NetApp

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the NetApp. In addition to that, SentinelOne is 2.26 times more volatile than NetApp Inc. It trades about 0.0 of its total potential returns per unit of risk. NetApp Inc is currently generating about 0.05 per unit of volatility. If you would invest  7,097  in NetApp Inc on January 18, 2024 and sell it today you would earn a total of  2,994  from holding NetApp Inc or generate 42.19% return on investment over 90 days.

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

SentinelOne  vs.  NetApp Inc

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NetApp Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and NetApp

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

The idea behind SentinelOne and NetApp Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.