Correlation Between SentinelOne and Horizon Active

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

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

Diversification Opportunities for SentinelOne and Horizon Active

0.9

Correlation Coefficient

SentinelOne  Horizon Active

Almost no diversification

The 3 months correlation between SentinelOne and Horizon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Horizon Active Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Asset 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Asset has no effect on the direction of SentinelOne i.e., SentinelOne and Horizon Active go up and down completely randomly.

Pair Corralation between SentinelOne and Horizon Active

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Horizon Active. In addition to that, SentinelOne is 2.39 times more volatile than Horizon Active Asset. It trades about -0.11 of its total potential returns per unit of risk. Horizon Active Asset is currently generating about -0.06 per unit of volatility. If you would invest  1,329  in Horizon Active Asset on December 30, 2024 and sell it today you would lose (54.00) from holding Horizon Active Asset or give up 4.06% of portfolio value over 90 days.

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

SentinelOne  vs.  Horizon Active Asset

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 unsteady 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.

Horizon Active Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Horizon Active Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Horizon Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Horizon Active

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

The idea behind SentinelOne and Horizon Active Asset 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.