Correlation Between SentinelOne and ON Semiconductor

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

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

Diversification Opportunities for SentinelOne and ON Semiconductor

0.46

Correlation Coefficient

SentinelOne  ON Semiconductor

Very weak diversification

The 3 months correlation between SentinelOne and O2NS34 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of SentinelOne i.e., SentinelOne and ON Semiconductor go up and down completely randomly.

Pair Corralation between SentinelOne and ON Semiconductor

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.7 times more return on investment than ON Semiconductor. However, SentinelOne is 1.43 times less risky than ON Semiconductor. It trades about -0.11 of its potential returns per unit of risk. ON Semiconductor is currently generating about -0.24 per unit of risk. If you would invest  2,269  in SentinelOne on December 24, 2024 and sell it today you would lose (342.00) from holding SentinelOne or give up 15.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

SentinelOne  vs.  ON Semiconductor

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ON Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SentinelOne and ON Semiconductor

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

The idea behind SentinelOne and ON Semiconductor 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..