Correlation Between SentinelOne and Bank of Nova Scotia

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

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

Diversification Opportunities for SentinelOne and Bank of Nova Scotia

-0.44

Correlation Coefficient

SentinelOne  Bank of Nova Scotia

Very good diversification

The 3 months correlation between SentinelOne and Bank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Bank of Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of SentinelOne i.e., SentinelOne and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between SentinelOne and Bank of Nova Scotia

Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.15 times more return on investment than Bank of Nova Scotia. However, SentinelOne is 2.15 times more volatile than Bank of Nova. It trades about -0.16 of its potential returns per unit of risk. Bank of Nova is currently generating about -0.4 per unit of risk. If you would invest  2,301  in SentinelOne on February 1, 2024 and sell it today you would lose (188.00) from holding SentinelOne or give up 8.17% of portfolio value over 90 days.

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

SentinelOne  vs.  Bank of Nova

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bank of Nova Scotia

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Bank of Nova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bank of Nova Scotia is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SentinelOne and Bank of Nova Scotia

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

The idea behind SentinelOne and Bank of Nova 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.