Correlation Between SentinelOne and Canadian Pacific

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

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

Diversification Opportunities for SentinelOne and Canadian Pacific

0.08

Correlation Coefficient

SentinelOne  Canadian Pacific

Significant diversification

The 3 months correlation between SentinelOne and Canadian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Canadian Pacific Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Pacific Railway 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 Canadian Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Pacific Railway has no effect on the direction of SentinelOne i.e., SentinelOne and Canadian Pacific go up and down completely randomly.

Pair Corralation between SentinelOne and Canadian Pacific

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Canadian Pacific. In addition to that, SentinelOne is 1.8 times more volatile than Canadian Pacific Railway. It trades about -0.14 of its total potential returns per unit of risk. Canadian Pacific Railway is currently generating about 0.02 per unit of volatility. If you would invest  7,645  in Canadian Pacific Railway on November 28, 2024 and sell it today you would earn a total of  104.00  from holding Canadian Pacific Railway or generate 1.36% return on investment over 90 days.

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

SentinelOne  vs.  Canadian Pacific Railway

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Canadian Pacific Railway

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Pacific Railway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Canadian Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SentinelOne and Canadian Pacific

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

The idea behind SentinelOne and Canadian Pacific Railway 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.