Correlation Between SentinelOne and NatWest Group

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

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

Diversification Opportunities for SentinelOne and NatWest Group

-0.34

Correlation Coefficient

SentinelOne  NatWest Group

Very good diversification

The 3 months correlation between SentinelOne and NatWest is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and NatWest Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group plc 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 NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group plc has no effect on the direction of SentinelOne i.e., SentinelOne and NatWest Group go up and down completely randomly.

Pair Corralation between SentinelOne and NatWest Group

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.51 times more return on investment than NatWest Group. However, SentinelOne is 1.95 times less risky than NatWest Group. It trades about -0.02 of its potential returns per unit of risk. NatWest Group plc is currently generating about -0.02 per unit of risk. If you would invest  2,243  in SentinelOne on October 23, 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 Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

SentinelOne  vs.  NatWest Group plc

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.

NatWest Group plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NatWest Group plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, NatWest Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and NatWest Group

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

The idea behind SentinelOne and NatWest Group plc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.