Correlation Between SentinelOne and Unity Software

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

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

Diversification Opportunities for SentinelOne and Unity Software

0.01

Correlation Coefficient

SentinelOne  Unity Software

Significant diversification

The 3 months correlation between SentinelOne and Unity is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of SentinelOne i.e., SentinelOne and Unity Software go up and down completely randomly.

Pair Corralation between SentinelOne and Unity Software

Taking into account the 90-day investment horizon SentinelOne is expected to generate 3.74 times less return on investment than Unity Software. But when comparing it to its historical volatility, SentinelOne is 1.21 times less risky than Unity Software. It trades about 0.03 of its potential returns per unit of risk. Unity Software is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,030  in Unity Software on September 16, 2024 and sell it today you would earn a total of  414.00  from holding Unity Software or generate 20.39% return on investment over 90 days.

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

SentinelOne  vs.  Unity Software

SentinelOne

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Unity Software

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Unity Software

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

The idea behind SentinelOne and Unity Software 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.