Correlation Between SentinelOne and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both SentinelOne and Cisco 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 Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Cisco Systems, you can compare the effects of market volatilities on SentinelOne and Cisco 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 Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Cisco Systems.
Diversification Opportunities for SentinelOne and Cisco Systems
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SentinelOne and Cisco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of SentinelOne i.e., SentinelOne and Cisco Systems go up and down completely randomly.
Pair Corralation between SentinelOne and Cisco Systems
Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.07 times less return on investment than Cisco Systems. In addition to that, SentinelOne is 1.7 times more volatile than Cisco Systems. It trades about 0.15 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.28 per unit of volatility. If you would invest 103,200 in Cisco Systems on August 30, 2024 and sell it today you would earn a total of 19,643 from holding Cisco Systems or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SentinelOne vs. Cisco Systems
Performance |
| Timeline |
| SentinelOne |
| Cisco Systems |
SentinelOne and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and Cisco Systems
The main advantage of trading using opposite SentinelOne and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Cisco 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.| SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Okta Inc | SentinelOne vs. Cloudflare | SentinelOne vs. MongoDB |
| Cisco Systems vs. McEwen Mining | Cisco Systems vs. Cognizant Technology Solutions | Cisco Systems vs. Costco Wholesale | Cisco Systems vs. Grupo Carso SAB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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