Correlation Between SentinelOne and Northern Lights
Can any of the company-specific risk be diversified away by investing in both SentinelOne and Northern Lights 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 Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Northern Lights, you can compare the effects of market volatilities on SentinelOne and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Northern Lights.
Diversification Opportunities for SentinelOne and Northern Lights
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SentinelOne and Northern is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of SentinelOne i.e., SentinelOne and Northern Lights go up and down completely randomly.
Pair Corralation between SentinelOne and Northern Lights
Taking into account the 90-day investment horizon SentinelOne is expected to generate 6.75 times more return on investment than Northern Lights. However, SentinelOne is 6.75 times more volatile than Northern Lights. It trades about 0.16 of its potential returns per unit of risk. Northern Lights is currently generating about 0.12 per unit of risk. If you would invest 1,683 in SentinelOne on August 29, 2024 and sell it today you would earn a total of 1,125 from holding SentinelOne or generate 66.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SentinelOne vs. Northern Lights
Performance |
| Timeline |
| SentinelOne |
| Northern Lights |
SentinelOne and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and Northern Lights
The main advantage of trading using opposite SentinelOne and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Okta Inc | SentinelOne vs. Cloudflare | SentinelOne vs. MongoDB |
| Northern Lights vs. WisdomTree Interest Rate | Northern Lights vs. WisdomTree SmallCap Quality | Northern Lights vs. WisdomTree Emerging Markets | Northern Lights vs. WisdomTree Emerging Markets |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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