Correlation Between SentinelOne and First Solar

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

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

Diversification Opportunities for SentinelOne and First Solar

-0.72

Correlation Coefficient

SentinelOne  First Solar

Pay attention - limited upside

The 3 months correlation between SentinelOne and First is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of SentinelOne i.e., SentinelOne and First Solar go up and down completely randomly.

Pair Corralation between SentinelOne and First Solar

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.0 times more return on investment than First Solar. However, SentinelOne is 1.0 times more volatile than First Solar. It trades about 0.05 of its potential returns per unit of risk. First Solar is currently generating about -0.06 per unit of risk. If you would invest  2,216  in SentinelOne on September 12, 2024 and sell it today you would earn a total of  145.00  from holding SentinelOne or generate 6.54% return on investment over 90 days.

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

SentinelOne  vs.  First Solar

SentinelOne

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SentinelOne may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with SentinelOne and First Solar

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

The idea behind SentinelOne and First Solar 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.