Correlation Between CVS Health and SentinelOne
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health and SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and SentinelOne, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and SentinelOne.
Diversification Opportunities for CVS Health and SentinelOne
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and SentinelOne is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and CVS Health 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 CVS Health Corp 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 CVS Health i.e., CVS Health and SentinelOne go up and down completely randomly.
Pair Corralation between CVS Health and SentinelOne
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the SentinelOne. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.24 times less risky than SentinelOne. The stock trades about -0.34 of its potential returns per unit of risk. The SentinelOne is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,248 in SentinelOne on January 25, 2024 and sell it today you would lose (91.00) from holding SentinelOne or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. SentinelOne
Performance |
| Timeline |
| CVS Health Corp |
| SentinelOne |
CVS Health and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and SentinelOne
The main advantage of trading using opposite CVS Health and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Okta Inc | SentinelOne vs. Cloudflare | SentinelOne vs. MongoDB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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