Correlation Between SentinelOne and Xai

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

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

Diversification Opportunities for SentinelOne and Xai

0.64

Correlation Coefficient

SentinelOne  Xai

Poor diversification

The 3 months correlation between SentinelOne and Xai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Xai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xai 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 Xai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xai has no effect on the direction of SentinelOne i.e., SentinelOne and Xai go up and down completely randomly.

Pair Corralation between SentinelOne and Xai

Taking into account the 90-day investment horizon SentinelOne is expected to generate 3.77 times less return on investment than Xai. But when comparing it to its historical volatility, SentinelOne is 2.82 times less risky than Xai. It trades about 0.14 of its potential returns per unit of risk. Xai is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Xai on September 1, 2024 and sell it today you would earn a total of  18.00  from holding Xai or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

SentinelOne  vs.  Xai

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.

Xai

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xai are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Xai exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Xai

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

The idea behind SentinelOne and Xai 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.