Correlation Between SentinelOne and WESCO International

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

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

Diversification Opportunities for SentinelOne and WESCO International

0.85

Correlation Coefficient

SentinelOne  WESCO International

Very poor diversification

The 3 months correlation between SentinelOne and WESCO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of SentinelOne i.e., SentinelOne and WESCO International go up and down completely randomly.

Pair Corralation between SentinelOne and WESCO International

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the WESCO International. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.08 times less risky than WESCO International. The stock trades about -0.09 of its potential returns per unit of risk. The WESCO International is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  17,839  in WESCO International on December 29, 2024 and sell it today you would lose (2,196) from holding WESCO International or give up 12.31% of portfolio value over 90 days.

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

SentinelOne  vs.  WESCO International

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.

WESCO International

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESCO International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SentinelOne and WESCO International

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

The idea behind SentinelOne and WESCO International 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.