Correlation Between SentinelOne and Molina Healthcare

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

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

Diversification Opportunities for SentinelOne and Molina Healthcare

0.1

Correlation Coefficient

SentinelOne  Molina Healthcare

Average diversification

The 3 months correlation between SentinelOne and Molina is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare 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 Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of SentinelOne i.e., SentinelOne and Molina Healthcare go up and down completely randomly.

Pair Corralation between SentinelOne and Molina Healthcare

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Molina Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.35 times less risky than Molina Healthcare. The stock trades about -0.03 of its potential returns per unit of risk. The Molina Healthcare is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  29,350  in Molina Healthcare on October 8, 2024 and sell it today you would lose (1,790) from holding Molina Healthcare or give up 6.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

SentinelOne  vs.  Molina Healthcare

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.

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molina Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SentinelOne and Molina Healthcare

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

The idea behind SentinelOne and Molina Healthcare 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.