Correlation Between SentinelOne and Legal General

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

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

Diversification Opportunities for SentinelOne and Legal General

-0.2

Correlation Coefficient

SentinelOne  Legal General

Good diversification

The 3 months correlation between SentinelOne and Legal is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of SentinelOne i.e., SentinelOne and Legal General go up and down completely randomly.

Pair Corralation between SentinelOne and Legal General

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Legal General. In addition to that, SentinelOne is 2.22 times more volatile than Legal General UCITS. It trades about -0.16 of its total potential returns per unit of risk. Legal General UCITS is currently generating about -0.06 per unit of volatility. If you would invest  2,222  in Legal General UCITS on October 8, 2024 and sell it today you would lose (23.00) from holding Legal General UCITS or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

SentinelOne  vs.  Legal General UCITS

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 comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Legal General UCITS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Legal General UCITS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Legal General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SentinelOne and Legal General

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

The idea behind SentinelOne and Legal General UCITS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.