Correlation Between SentinelOne and Northwest Bancshares
Can any of the company-specific risk be diversified away by investing in both SentinelOne and Northwest Bancshares 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 Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and Northwest Bancshares, you can compare the effects of market volatilities on SentinelOne and Northwest Bancshares 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 Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Northwest Bancshares.
Diversification Opportunities for SentinelOne and Northwest Bancshares
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SentinelOne and Northwest is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares 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 Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of SentinelOne i.e., SentinelOne and Northwest Bancshares go up and down completely randomly.
Pair Corralation between SentinelOne and Northwest Bancshares
Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.61 times less return on investment than Northwest Bancshares. But when comparing it to its historical volatility, SentinelOne is 1.32 times less risky than Northwest Bancshares. It trades about 0.13 of its potential returns per unit of risk. Northwest Bancshares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,330 in Northwest Bancshares on August 29, 2024 and sell it today you would earn a total of 154.00 from holding Northwest Bancshares or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SentinelOne vs. Northwest Bancshares
Performance |
| Timeline |
| SentinelOne |
| Northwest Bancshares |
SentinelOne and Northwest Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and Northwest Bancshares
The main advantage of trading using opposite SentinelOne and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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