Correlation Between Pagaya Technologies and SentinelOne

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

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

Diversification Opportunities for Pagaya Technologies and SentinelOne

-0.23

Correlation Coefficient

Pagaya Technologies  SentinelOne

Very good diversification

The 3 months correlation between Pagaya and SentinelOne is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pagaya Technologies and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Pagaya Technologies 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 Pagaya Technologies 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 Pagaya Technologies i.e., Pagaya Technologies and SentinelOne go up and down completely randomly.

Pair Corralation between Pagaya Technologies and SentinelOne

Considering the 90-day investment horizon Pagaya Technologies is expected to generate 1.13 times less return on investment than SentinelOne. In addition to that, Pagaya Technologies is 4.24 times more volatile than SentinelOne. It trades about 0.03 of its total potential returns per unit of risk. SentinelOne is currently generating about 0.17 per unit of volatility. If you would invest  2,579  in SentinelOne on September 1, 2024 and sell it today you would earn a total of  216.00  from holding SentinelOne or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pagaya Technologies  vs.  SentinelOne

Pagaya Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagaya Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Pagaya Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Pagaya Technologies and SentinelOne

The main advantage of trading using opposite Pagaya Technologies and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pagaya Technologies 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 Pagaya Technologies 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.