Correlation Between SentinelOne and BAE Systems
Can any of the company-specific risk be diversified away by investing in both SentinelOne and BAE Systems 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 BAE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and BAE Systems plc, you can compare the effects of market volatilities on SentinelOne and BAE Systems 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 BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and BAE Systems.
Diversification Opportunities for SentinelOne and BAE Systems
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SentinelOne and BAE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and BAE Systems plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems 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 BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems plc has no effect on the direction of SentinelOne i.e., SentinelOne and BAE Systems go up and down completely randomly.
Pair Corralation between SentinelOne and BAE Systems
Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.28 times more return on investment than BAE Systems. However, SentinelOne is 1.28 times more volatile than BAE Systems plc. It trades about 0.18 of its potential returns per unit of risk. BAE Systems plc is currently generating about 0.08 per unit of risk. If you would invest 2,609 in SentinelOne on August 27, 2024 and sell it today you would earn a total of 245.00 from holding SentinelOne or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SentinelOne vs. BAE Systems plc
Performance |
| Timeline |
| SentinelOne |
| BAE Systems plc |
SentinelOne and BAE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and BAE Systems
The main advantage of trading using opposite SentinelOne and BAE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, BAE Systems 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 BAE Systems will offset losses from the drop in BAE Systems' 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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