Correlation Between SentinelOne and FEDEX

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

Diversification Opportunities for SentinelOne and FEDEX

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between SentinelOne and FEDEX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and FEDEX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P has no effect on the direction of SentinelOne i.e., SentinelOne and FEDEX go up and down completely randomly.

Pair Corralation between SentinelOne and FEDEX

Taking into account the 90-day investment horizon SentinelOne is expected to generate 21.57 times less return on investment than FEDEX. But when comparing it to its historical volatility, SentinelOne is 18.47 times less risky than FEDEX. It trades about 0.05 of its potential returns per unit of risk. FEDEX P is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,469  in FEDEX P on August 30, 2024 and sell it today you would earn a total of  37.00  from holding FEDEX P or generate 0.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy87.07%
ValuesDaily Returns

SentinelOne  vs.  FEDEX P

 Performance 
       Timeline  
SentinelOne 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.
FEDEX P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Modest
Over the last 90 days FEDEX P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SentinelOne and FEDEX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SentinelOne and FEDEX

The main advantage of trading using opposite SentinelOne and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX's long position.
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The idea behind SentinelOne and FEDEX P 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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