Correlation Between SentinelOne and Shift4 Payments

Can any of the company-specific risk be diversified away by investing in both SentinelOne and Shift4 Payments 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 Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SentinelOne and Shift4 Payments, you can compare the effects of market volatilities on SentinelOne and Shift4 Payments 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 Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Shift4 Payments.

Diversification Opportunities for SentinelOne and Shift4 Payments

0.12

Correlation Coefficient

SentinelOne  Shift4 Payments

Average diversification

The 3 months correlation between SentinelOne and Shift4 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments 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 Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of SentinelOne i.e., SentinelOne and Shift4 Payments go up and down completely randomly.

Pair Corralation between SentinelOne and Shift4 Payments

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Shift4 Payments. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.3 times less risky than Shift4 Payments. The stock trades about -0.14 of its potential returns per unit of risk. The Shift4 Payments is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,408  in Shift4 Payments on November 28, 2024 and sell it today you would lose (1,754) from holding Shift4 Payments or give up 15.38% of portfolio value over 90 days.

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

SentinelOne  vs.  Shift4 Payments

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.

Shift4 Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SentinelOne and Shift4 Payments

The main advantage of trading using opposite SentinelOne and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.

The idea behind SentinelOne and Shift4 Payments 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.