Correlation Between SentinelOne and Aqua America

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

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

Diversification Opportunities for SentinelOne and Aqua America

0.53

Correlation Coefficient

SentinelOne  Aqua America

Very weak diversification

The 3 months correlation between SentinelOne and Aqua is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of SentinelOne i.e., SentinelOne and Aqua America go up and down completely randomly.

Pair Corralation between SentinelOne and Aqua America

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Aqua America. In addition to that, SentinelOne is 1.87 times more volatile than Aqua America. It trades about -0.16 of its total potential returns per unit of risk. Aqua America is currently generating about -0.25 per unit of volatility. If you would invest  3,653  in Aqua America on October 8, 2024 and sell it today you would lose (179.00) from holding Aqua America or give up 4.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.21%
Values	Daily Returns

SentinelOne  vs.  Aqua America

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.

Aqua America

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aqua America is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SentinelOne and Aqua America

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

The idea behind SentinelOne and Aqua America 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.