Correlation Between SentinelOne and Federated Municipal

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

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

Diversification Opportunities for SentinelOne and Federated Municipal

-0.64

Correlation Coefficient

SentinelOne  Federated Municipal

Excellent diversification

The 3 months correlation between SentinelOne and Federated is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Federated Municipal Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Municipal 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 Federated Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Municipal has no effect on the direction of SentinelOne i.e., SentinelOne and Federated Municipal go up and down completely randomly.

Pair Corralation between SentinelOne and Federated Municipal

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Federated Municipal. In addition to that, SentinelOne is 18.81 times more volatile than Federated Municipal Ultrashort. It trades about -0.02 of its total potential returns per unit of risk. Federated Municipal Ultrashort is currently generating about 0.27 per unit of volatility. If you would invest  997.00  in Federated Municipal Ultrashort on October 23, 2024 and sell it today you would earn a total of  3.00  from holding Federated Municipal Ultrashort or generate 0.3% return on investment over 90 days.

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

SentinelOne  vs.  Federated Municipal Ultrashort

SentinelOne

Risk-Adjusted Performance

0 of 100

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 unsteady 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.

Federated Municipal

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Municipal Ultrashort are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Federated Municipal

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

The idea behind SentinelOne and Federated Municipal Ultrashort 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.