Correlation Between SentinelOne and Silicon Laboratories

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

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

Diversification Opportunities for SentinelOne and Silicon Laboratories

-0.61

Correlation Coefficient

SentinelOne  Silicon Laboratories

Excellent diversification

The 3 months correlation between SentinelOne and Silicon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of SentinelOne i.e., SentinelOne and Silicon Laboratories go up and down completely randomly.

Pair Corralation between SentinelOne and Silicon Laboratories

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Silicon Laboratories. In addition to that, SentinelOne is 1.03 times more volatile than Silicon Laboratories. It trades about -0.14 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about 0.18 per unit of volatility. If you would invest  11,065  in Silicon Laboratories on November 28, 2024 and sell it today you would earn a total of  3,364  from holding Silicon Laboratories or generate 30.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SentinelOne  vs.  Silicon Laboratories

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Silicon Laboratories

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Silicon Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Silicon Laboratories

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

The idea behind SentinelOne and Silicon Laboratories 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.