Correlation Between SentinelOne and DigitalBridge

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

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

Diversification Opportunities for SentinelOne and DigitalBridge

-0.31

Correlation Coefficient

SentinelOne  DigitalBridge

Very good diversification

The 3 months correlation between SentinelOne and DigitalBridge is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group 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 DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of SentinelOne i.e., SentinelOne and DigitalBridge go up and down completely randomly.

Pair Corralation between SentinelOne and DigitalBridge

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the DigitalBridge. In addition to that, SentinelOne is 4.18 times more volatile than DigitalBridge Group. It trades about -0.07 of its total potential returns per unit of risk. DigitalBridge Group is currently generating about 0.03 per unit of volatility. If you would invest  2,406  in DigitalBridge Group on December 26, 2024 and sell it today you would earn a total of  19.00  from holding DigitalBridge Group or generate 0.79% return on investment over 90 days.

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

SentinelOne  vs.  DigitalBridge Group

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 latest abnormal 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.

DigitalBridge Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalBridge Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, DigitalBridge is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SentinelOne and DigitalBridge

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

The idea behind SentinelOne and DigitalBridge Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.