Correlation Between Informatica and SentinelOne

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

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

Diversification Opportunities for Informatica and SentinelOne

0.19

Correlation Coefficient

Informatica  SentinelOne

Average diversification

The 3 months correlation between Informatica and SentinelOne is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Informatica and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Informatica 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 Informatica 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 Informatica i.e., Informatica and SentinelOne go up and down completely randomly.

Pair Corralation between Informatica and SentinelOne

Given the investment horizon of 90 days Informatica is expected to under-perform the SentinelOne. But the stock apears to be less risky and, when comparing its historical volatility, Informatica is 1.41 times less risky than SentinelOne. The stock trades about -0.07 of its potential returns per unit of risk. The SentinelOne is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,248  in SentinelOne on September 20, 2024 and sell it today you would lose (15.00) from holding SentinelOne or give up 0.67% of portfolio value over 90 days.

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

Informatica  vs.  SentinelOne

Informatica

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Informatica is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Informatica and SentinelOne

The main advantage of trading using opposite Informatica and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informatica 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 Informatica 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..