Correlation Between SentinelOne and Optimism

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

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

Diversification Opportunities for SentinelOne and Optimism

0.47

Correlation Coefficient

SentinelOne  Optimism

Very weak diversification

The 3 months correlation between SentinelOne and Optimism is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism 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 Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of SentinelOne i.e., SentinelOne and Optimism go up and down completely randomly.

Pair Corralation between SentinelOne and Optimism

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.45 times more return on investment than Optimism. However, SentinelOne is 2.2 times less risky than Optimism. It trades about -0.11 of its potential returns per unit of risk. Optimism is currently generating about -0.22 per unit of risk. If you would invest  2,246  in SentinelOne on December 30, 2024 and sell it today you would lose (362.00) from holding SentinelOne or give up 16.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

SentinelOne  vs.  Optimism

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.

Optimism

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimism 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 Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Optimism shareholders.

Pair Trading with SentinelOne and Optimism

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

The idea behind SentinelOne and Optimism 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.