Correlation Between SentinelOne and Kava

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

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

Diversification Opportunities for SentinelOne and Kava

0.05

Correlation Coefficient

SentinelOne  Kava

Significant diversification

The 3 months correlation between SentinelOne and Kava is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Kava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kava 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 Kava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kava has no effect on the direction of SentinelOne i.e., SentinelOne and Kava go up and down completely randomly.

Pair Corralation between SentinelOne and Kava

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Kava. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.96 times less risky than Kava. The stock trades about -0.11 of its potential returns per unit of risk. The Kava is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Kava on December 30, 2024 and sell it today you would lose (2.00) from holding Kava or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

SentinelOne  vs.  Kava

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kava

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kava has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kava is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SentinelOne and Kava

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

The idea behind SentinelOne and Kava 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.