Correlation Between SentinelOne and DBC

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

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

Diversification Opportunities for SentinelOne and DBC

0.3

Correlation Coefficient

SentinelOne  DBC

Weak diversification

The 3 months correlation between SentinelOne and DBC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and DBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBC 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 DBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBC has no effect on the direction of SentinelOne i.e., SentinelOne and DBC go up and down completely randomly.

Pair Corralation between SentinelOne and DBC

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the DBC. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 9.84 times less risky than DBC. The stock trades about -0.09 of its potential returns per unit of risk. The DBC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.37  in DBC on December 29, 2024 and sell it today you would lose (0.01) from holding DBC or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

SentinelOne  vs.  DBC

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.

DBC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DBC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, DBC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and DBC

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

The idea behind SentinelOne and DBC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.