Correlation Between SentinelOne and AbbVie

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

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

Diversification Opportunities for SentinelOne and AbbVie

-0.7

Correlation Coefficient

SentinelOne  AbbVie

Excellent diversification

The 3 months correlation between SentinelOne and AbbVie is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of SentinelOne i.e., SentinelOne and AbbVie go up and down completely randomly.

Pair Corralation between SentinelOne and AbbVie

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the AbbVie. In addition to that, SentinelOne is 1.74 times more volatile than AbbVie Inc. It trades about -0.11 of its total potential returns per unit of risk. AbbVie Inc is currently generating about 0.2 per unit of volatility. If you would invest  17,455  in AbbVie Inc on December 30, 2024 and sell it today you would earn a total of  3,074  from holding AbbVie Inc or generate 17.61% return on investment over 90 days.

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

SentinelOne  vs.  AbbVie Inc

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.

AbbVie Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, AbbVie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and AbbVie

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

The idea behind SentinelOne and AbbVie Inc 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 Valuation module to check real value of public entities based on technical and fundamental data.