Correlation Between SentinelOne and MP Materials

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

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

Diversification Opportunities for SentinelOne and MP Materials

-0.35

Correlation Coefficient

SentinelOne  MP Materials

Very good diversification

The 3 months correlation between SentinelOne and M2PM34 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and MP Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MP Materials Corp 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 MP Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MP Materials Corp has no effect on the direction of SentinelOne i.e., SentinelOne and MP Materials go up and down completely randomly.

Pair Corralation between SentinelOne and MP Materials

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the MP Materials. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.93 times less risky than MP Materials. The stock trades about -0.07 of its potential returns per unit of risk. The MP Materials Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,028  in MP Materials Corp on December 24, 2024 and sell it today you would earn a total of  990.00  from holding MP Materials Corp or generate 48.82% return on investment over 90 days.

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

SentinelOne  vs.  MP Materials Corp

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 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.

MP Materials Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MP Materials Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MP Materials sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and MP Materials

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

The idea behind SentinelOne and MP Materials Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.