Correlation Between SentinelOne and Basic Energy

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

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

Diversification Opportunities for SentinelOne and Basic Energy

-0.44

Correlation Coefficient

SentinelOne  Basic Energy

Very good diversification

The 3 months correlation between SentinelOne and Basic is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy Corp 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 Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of SentinelOne i.e., SentinelOne and Basic Energy go up and down completely randomly.

Pair Corralation between SentinelOne and Basic Energy

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.27 times more return on investment than Basic Energy. However, SentinelOne is 3.64 times less risky than Basic Energy. It trades about -0.02 of its potential returns per unit of risk. Basic Energy Corp is currently generating about -0.09 per unit of risk. If you would invest  2,243  in SentinelOne on October 23, 2024 and sell it today you would lose (10.00) from holding SentinelOne or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

SentinelOne  vs.  Basic Energy Corp

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Basic Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Basic Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Basic Energy 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 Basic Energy

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

The idea behind SentinelOne and Basic Energy Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.