Correlation Between SentinelOne and McDonalds Corp

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

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

Diversification Opportunities for SentinelOne and McDonalds Corp

0.4

Correlation Coefficient

SentinelOne  McDonalds Corp

Very weak diversification

The 3 months correlation between SentinelOne and McDonalds is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and McDonalds Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds Corp CDR 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 McDonalds Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds Corp CDR has no effect on the direction of SentinelOne i.e., SentinelOne and McDonalds Corp go up and down completely randomly.

Pair Corralation between SentinelOne and McDonalds Corp

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.44 times more return on investment than McDonalds Corp. However, SentinelOne is 1.44 times more volatile than McDonalds Corp CDR. It trades about -0.02 of its potential returns per unit of risk. McDonalds Corp CDR is currently generating about -0.27 per unit of risk. If you would invest  2,243  in SentinelOne on October 22, 2024 and sell it today you would lose (10.00) from holding SentinelOne or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

SentinelOne  vs.  McDonalds Corp CDR

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 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.

McDonalds Corp CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McDonalds Corp CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SentinelOne and McDonalds Corp

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

The idea behind SentinelOne and McDonalds Corp CDR 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.