Correlation Between SentinelOne and Altern Energy

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

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

Diversification Opportunities for SentinelOne and Altern Energy

-0.74

Correlation Coefficient

SentinelOne  Altern Energy

Pay attention - limited upside

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

Pair Corralation between SentinelOne and Altern Energy

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Altern Energy. In addition to that, SentinelOne is 1.54 times more volatile than Altern Energy. It trades about -0.14 of its total potential returns per unit of risk. Altern Energy is currently generating about 0.45 per unit of volatility. If you would invest  1,650  in Altern Energy on October 8, 2024 and sell it today you would earn a total of  741.00  from holding Altern Energy or generate 44.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

SentinelOne  vs.  Altern Energy

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.

Altern Energy

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altern Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Altern Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Altern Energy

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

The idea behind SentinelOne and Altern Energy 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.