Correlation Between SentinelOne and American Airlines

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

By analyzing existing cross correlation between SentinelOne and American Airlines Group, you can compare the effects of market volatilities on SentinelOne and American Airlines 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and American Airlines.

Diversification Opportunities for SentinelOne and American Airlines

0.89

Correlation Coefficient

SentinelOne  American Airlines

Very poor diversification

The 3 months correlation between SentinelOne and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of SentinelOne i.e., SentinelOne and American Airlines go up and down completely randomly.

Pair Corralation between SentinelOne and American Airlines

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.51 times less return on investment than American Airlines. In addition to that, SentinelOne is 1.05 times more volatile than American Airlines Group. It trades about 0.14 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.22 per unit of volatility. If you would invest  1,060  in American Airlines Group on September 1, 2024 and sell it today you would earn a total of  392.00  from holding American Airlines Group or generate 36.98% return on investment over 90 days.

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

SentinelOne  vs.  American Airlines Group

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.

American Airlines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and American Airlines

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

The idea behind SentinelOne and American Airlines Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.