Correlation Between SentinelOne and RFM Corp
Can any of the company-specific risk be diversified away by investing in both SentinelOne and RFM Corp 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 RFM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SentinelOne and RFM Corp, you can compare the effects of market volatilities on SentinelOne and RFM Corp 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 RFM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and RFM Corp.
Diversification Opportunities for SentinelOne and RFM Corp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SentinelOne and RFM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and RFM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFM Corp 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 RFM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFM Corp has no effect on the direction of SentinelOne i.e., SentinelOne and RFM Corp go up and down completely randomly.
Pair Corralation between SentinelOne and RFM Corp
Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.32 times less return on investment than RFM Corp. In addition to that, SentinelOne is 1.47 times more volatile than RFM Corp. It trades about 0.03 of its total potential returns per unit of risk. RFM Corp is currently generating about 0.11 per unit of volatility. If you would invest 270.00 in RFM Corp on September 1, 2024 and sell it today you would earn a total of 120.00 from holding RFM Corp or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.81% |
| Values | Daily Returns |
SentinelOne vs. RFM Corp
Performance |
| Timeline |
| SentinelOne |
| RFM Corp |
SentinelOne and RFM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SentinelOne and RFM Corp
The main advantage of trading using opposite SentinelOne and RFM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, RFM Corp 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 RFM Corp will offset losses from the drop in RFM Corp's long position.| SentinelOne vs. Palo Alto Networks | SentinelOne vs. Uipath Inc | SentinelOne vs. Block Inc | SentinelOne vs. Adobe Systems Incorporated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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