Correlation Between SentinelOne and Fortune Brands

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

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

Diversification Opportunities for SentinelOne and Fortune Brands

0.52

Correlation Coefficient

SentinelOne  Fortune Brands

Very weak diversification

The 3 months correlation between SentinelOne and Fortune is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of SentinelOne i.e., SentinelOne and Fortune Brands go up and down completely randomly.

Pair Corralation between SentinelOne and Fortune Brands

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.58 times more return on investment than Fortune Brands. However, SentinelOne is 1.58 times more volatile than Fortune Brands Home. It trades about -0.03 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.15 per unit of risk. If you would invest  2,464  in SentinelOne on October 8, 2024 and sell it today you would lose (179.00) from holding SentinelOne or give up 7.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

SentinelOne  vs.  Fortune Brands Home

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fortune Brands Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SentinelOne and Fortune Brands

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

The idea behind SentinelOne and Fortune Brands Home 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.