Correlation Between Dlocal and SentinelOne

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

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

Diversification Opportunities for Dlocal and SentinelOne

0.89

Correlation Coefficient

Dlocal  SentinelOne

Very poor diversification

The 3 months correlation between Dlocal and SentinelOne is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Dlocal 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 Dlocal are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Dlocal i.e., Dlocal and SentinelOne go up and down completely randomly.

Pair Corralation between Dlocal and SentinelOne

Considering the 90-day investment horizon Dlocal is expected to under-perform the SentinelOne. In addition to that, Dlocal is 2.1 times more volatile than SentinelOne. It trades about -0.07 of its total potential returns per unit of risk. SentinelOne is currently generating about -0.09 per unit of volatility. If you would invest  2,246  in SentinelOne on December 29, 2024 and sell it today you would lose (311.00) from holding SentinelOne or give up 13.85% of portfolio value over 90 days.

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

Dlocal  vs.  SentinelOne

Dlocal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dlocal 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 essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SentinelOne

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dlocal and SentinelOne

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

The idea behind Dlocal and SentinelOne 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.