Correlation Between SentinelOne and Smart REIT

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Can any of the company-specific risk be diversified away by investing in both SentinelOne and Smart REIT 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 Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Smart REIT, you can compare the effects of market volatilities on SentinelOne and Smart REIT 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 Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Smart REIT.

Diversification Opportunities for SentinelOne and Smart REIT

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SentinelOne and Smart is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of SentinelOne i.e., SentinelOne and Smart REIT go up and down completely randomly.

Pair Corralation between SentinelOne and Smart REIT

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.19 times more return on investment than Smart REIT. However, SentinelOne is 1.19 times more volatile than Smart REIT. It trades about 0.06 of its potential returns per unit of risk. Smart REIT is currently generating about 0.02 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.78%
ValuesDaily Returns

SentinelOne  vs.  Smart REIT

 Performance 
       Timeline  
SentinelOne 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.
Smart REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Smart REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Smart REIT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SentinelOne and Smart REIT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SentinelOne and Smart REIT

The main advantage of trading using opposite SentinelOne and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.
The idea behind SentinelOne and Smart REIT 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.
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 Valuation module to check real value of public entities based on technical and fundamental data.

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