Correlation Between SentinelOne and Stone Ridge

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

By analyzing existing cross correlation between SentinelOne and Stone Ridge 2051, you can compare the effects of market volatilities on SentinelOne and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Stone Ridge.

Diversification Opportunities for SentinelOne and Stone Ridge

0.75

Correlation Coefficient

SentinelOne  Stone Ridge

Poor diversification

The 3 months correlation between SentinelOne and Stone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Stone Ridge 2051 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2051 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2051 has no effect on the direction of SentinelOne i.e., SentinelOne and Stone Ridge go up and down completely randomly.

Pair Corralation between SentinelOne and Stone Ridge

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Stone Ridge. In addition to that, SentinelOne is 5.33 times more volatile than Stone Ridge 2051. It trades about -0.05 of its total potential returns per unit of risk. Stone Ridge 2051 is currently generating about -0.01 per unit of volatility. If you would invest  13,663  in Stone Ridge 2051 on November 19, 2024 and sell it today you would lose (53.40) from holding Stone Ridge 2051 or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

SentinelOne  vs.  Stone Ridge 2051

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 latest weak 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.

Stone Ridge 2051

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stone Ridge 2051 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Stone Ridge is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with SentinelOne and Stone Ridge

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

The idea behind SentinelOne and Stone Ridge 2051 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 Global Correlations module to find global opportunities by holding instruments from different markets.