Correlation Between SentinelOne and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both SentinelOne and Pentair PLC 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 Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Pentair PLC, you can compare the effects of market volatilities on SentinelOne and Pentair PLC 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 Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Pentair PLC.
Diversification Opportunities for SentinelOne and Pentair PLC
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SentinelOne and Pentair is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC 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 Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of SentinelOne i.e., SentinelOne and Pentair PLC go up and down completely randomly.
Pair Corralation between SentinelOne and Pentair PLC
Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.04 times more return on investment than Pentair PLC. However, SentinelOne is 2.04 times more volatile than Pentair PLC. It trades about 0.06 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.11 per unit of risk. If you would invest 1,397 in SentinelOne on August 28, 2024 and sell it today you would earn a total of 1,391 from holding SentinelOne or generate 99.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.14% |
| Values | Daily Returns |
SentinelOne vs. Pentair PLC
Performance |
| Timeline |
| SentinelOne |
| Pentair PLC |
SentinelOne and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and Pentair PLC
The main advantage of trading using opposite SentinelOne and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Pentair PLC 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 Pentair PLC will offset losses from the drop in Pentair PLC's long position.| SentinelOne vs. GigaCloud Technology Class | SentinelOne vs. Arqit Quantum | SentinelOne vs. Cemtrex | SentinelOne vs. Paysafe |
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Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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