Correlation Between SentinelOne and Crowdstrike Holdings

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

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

Diversification Opportunities for SentinelOne and Crowdstrike Holdings

0.93

Correlation Coefficient

SentinelOne  Crowdstrike Holdings

Almost no diversification

The 3 months correlation between SentinelOne and Crowdstrike is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike 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 Crowdstrike Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crowdstrike Holdings has no effect on the direction of SentinelOne i.e., SentinelOne and Crowdstrike Holdings go up and down completely randomly.

Pair Corralation between SentinelOne and Crowdstrike Holdings

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.86 times more return on investment than Crowdstrike Holdings. However, SentinelOne is 1.16 times less risky than Crowdstrike Holdings. It trades about 0.16 of its potential returns per unit of risk. Crowdstrike Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,722  in SentinelOne on September 1, 2024 and sell it today you would earn a total of  1,073  from holding SentinelOne or generate 62.31% return on investment over 90 days.

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

SentinelOne  vs.  Crowdstrike Holdings

SentinelOne

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crowdstrike Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Crowdstrike Holdings

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

The idea behind SentinelOne and Crowdstrike 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.