Correlation Between Shift4 Payments and SentinelOne

Can any of the company-specific risk be diversified away by investing in both Shift4 Payments and SentinelOne 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 Shift4 Payments and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shift4 Payments and SentinelOne, you can compare the effects of market volatilities on Shift4 Payments and SentinelOne 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 Shift4 Payments with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and SentinelOne.

Diversification Opportunities for Shift4 Payments and SentinelOne

0.9

Correlation Coefficient

Shift4 Payments  SentinelOne

Almost no diversification

The 3 months correlation between Shift4 and SentinelOne is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Shift4 Payments 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 Shift4 Payments are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Shift4 Payments i.e., Shift4 Payments and SentinelOne go up and down completely randomly.

Pair Corralation between Shift4 Payments and SentinelOne

Given the investment horizon of 90 days Shift4 Payments is expected to generate 0.89 times more return on investment than SentinelOne. However, Shift4 Payments is 1.13 times less risky than SentinelOne. It trades about 0.27 of its potential returns per unit of risk. SentinelOne is currently generating about 0.14 per unit of risk. If you would invest  7,918  in Shift4 Payments on September 1, 2024 and sell it today you would earn a total of  3,490  from holding Shift4 Payments or generate 44.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Shift4 Payments  vs.  SentinelOne

Shift4 Payments

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shift4 Payments are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Shift4 Payments reported solid returns over the last few months and may actually be approaching a breakup point.

SentinelOne

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shift4 Payments and SentinelOne

The main advantage of trading using opposite Shift4 Payments and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments position performs unexpectedly, SentinelOne 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 SentinelOne will offset losses from the drop in SentinelOne's long position.

The idea behind Shift4 Payments and SentinelOne 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.