Correlation Between SPS Commerce and SentinelOne

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

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

Diversification Opportunities for SPS Commerce and SentinelOne

-0.27

Correlation Coefficient

SPS Commerce  SentinelOne

Very good diversification

The 3 months correlation between SPS and SentinelOne is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and SPS Commerce 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 SPS Commerce 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 SPS Commerce i.e., SPS Commerce and SentinelOne go up and down completely randomly.

Pair Corralation between SPS Commerce and SentinelOne

Given the investment horizon of 90 days SPS Commerce is expected to generate 0.73 times more return on investment than SentinelOne. However, SPS Commerce is 1.37 times less risky than SentinelOne. It trades about -0.01 of its potential returns per unit of risk. SentinelOne is currently generating about -0.03 per unit of risk. If you would invest  19,531  in SPS Commerce on September 21, 2024 and sell it today you would lose (501.00) from holding SPS Commerce or give up 2.57% of portfolio value over 90 days.

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

SPS Commerce  vs.  SentinelOne

SPS Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPS Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPS Commerce is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SPS Commerce and SentinelOne

The main advantage of trading using opposite SPS Commerce and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPS Commerce 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 SPS Commerce 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 Stocks Directory module to find actively traded stocks across global markets.