Correlation Between F5 Networks and SentinelOne

Can any of the company-specific risk be diversified away by investing in both F5 Networks 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 F5 Networks and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between F5 Networks and SentinelOne, you can compare the effects of market volatilities on F5 Networks 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 F5 Networks with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of F5 Networks and SentinelOne.

Diversification Opportunities for F5 Networks and SentinelOne

0.41

Correlation Coefficient

F5 Networks  SentinelOne

Very weak diversification

The 3 months correlation between FFIV and SentinelOne is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and F5 Networks 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 F5 Networks 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 F5 Networks i.e., F5 Networks and SentinelOne go up and down completely randomly.

Pair Corralation between F5 Networks and SentinelOne

Given the investment horizon of 90 days F5 Networks is expected to generate 0.86 times more return on investment than SentinelOne. However, F5 Networks is 1.17 times less risky than SentinelOne. It trades about 0.06 of its potential returns per unit of risk. SentinelOne is currently generating about -0.09 per unit of risk. If you would invest  25,248  in F5 Networks on December 28, 2024 and sell it today you would earn a total of  1,760  from holding F5 Networks or generate 6.97% return on investment over 90 days.

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

F5 Networks  vs.  SentinelOne

F5 Networks

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, F5 Networks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 abnormal 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 F5 Networks and SentinelOne

The main advantage of trading using opposite F5 Networks and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F5 Networks 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 F5 Networks 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.