Correlation Between Gen Digital and SentinelOne

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

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

Diversification Opportunities for Gen Digital and SentinelOne

0.11

Correlation Coefficient

Gen Digital  SentinelOne

Average diversification

The 3 months correlation between Gen and SentinelOne is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Gen Digital 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 Gen Digital 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 Gen Digital i.e., Gen Digital and SentinelOne go up and down completely randomly.

Pair Corralation between Gen Digital and SentinelOne

Considering the 90-day investment horizon Gen Digital is expected to generate 0.53 times more return on investment than SentinelOne. However, Gen Digital is 1.88 times less risky than SentinelOne. It trades about 0.01 of its potential returns per unit of risk. SentinelOne is currently generating about -0.07 per unit of risk. If you would invest  2,753  in Gen Digital on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Gen Digital or generate 0.0% return on investment over 90 days.

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

Gen Digital  vs.  SentinelOne

Gen Digital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gen Digital and SentinelOne

The main advantage of trading using opposite Gen Digital and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gen Digital 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 Gen Digital 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.