Correlation Between SentinelOne and Veeco Instruments

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

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

Diversification Opportunities for SentinelOne and Veeco Instruments

0.68

Correlation Coefficient

SentinelOne  Veeco Instruments

Poor diversification

The 3 months correlation between SentinelOne and Veeco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments 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 Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of SentinelOne i.e., SentinelOne and Veeco Instruments go up and down completely randomly.

Pair Corralation between SentinelOne and Veeco Instruments

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.95 times more return on investment than Veeco Instruments. However, SentinelOne is 1.06 times less risky than Veeco Instruments. It trades about -0.09 of its potential returns per unit of risk. Veeco Instruments is currently generating about -0.17 per unit of risk. If you would invest  2,246  in SentinelOne on December 29, 2024 and sell it today you would lose (311.00) from holding SentinelOne or give up 13.85% of portfolio value over 90 days.

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

SentinelOne  vs.  Veeco Instruments

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.

Veeco Instruments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veeco Instruments 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SentinelOne and Veeco Instruments

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

The idea behind SentinelOne and Veeco Instruments 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.