Correlation Between SentinelOne and Affirm Holdings

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

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

Diversification Opportunities for SentinelOne and Affirm Holdings

0.74

Correlation Coefficient

SentinelOne  Affirm Holdings

Poor diversification

The 3 months correlation between SentinelOne and Affirm is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings 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 Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of SentinelOne i.e., SentinelOne and Affirm Holdings go up and down completely randomly.

Pair Corralation between SentinelOne and Affirm Holdings

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.45 times more return on investment than Affirm Holdings. However, SentinelOne is 2.2 times less risky than Affirm Holdings. It trades about -0.09 of its potential returns per unit of risk. Affirm Holdings is currently generating about -0.08 per unit of risk. If you would invest  2,243  in SentinelOne on December 20, 2024 and sell it today you would lose (306.00) from holding SentinelOne or give up 13.64% of portfolio value over 90 days.

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

SentinelOne  vs.  Affirm Holdings

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.

Affirm Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affirm Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SentinelOne and Affirm Holdings

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

The idea behind SentinelOne and Affirm Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.