Correlation Between SentinelOne and Equinor ASA

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

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

Diversification Opportunities for SentinelOne and Equinor ASA

0.04

Correlation Coefficient

SentinelOne  Equinor ASA

Significant diversification

The 3 months correlation between SentinelOne and Equinor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA ADR 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of SentinelOne i.e., SentinelOne and Equinor ASA go up and down completely randomly.

Pair Corralation between SentinelOne and Equinor ASA

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Equinor ASA. In addition to that, SentinelOne is 1.34 times more volatile than Equinor ASA ADR. It trades about -0.16 of its total potential returns per unit of risk. Equinor ASA ADR is currently generating about -0.03 per unit of volatility. If you would invest  2,382  in Equinor ASA ADR on November 28, 2024 and sell it today you would lose (119.00) from holding Equinor ASA ADR or give up 5.0% of portfolio value over 90 days.

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

SentinelOne  vs.  Equinor ASA ADR

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.

Equinor ASA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equinor ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equinor ASA 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 Equinor ASA

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

The idea behind SentinelOne and Equinor ASA ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.