Correlation Between Broadcom and SentinelOne

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

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

Diversification Opportunities for Broadcom and SentinelOne

-0.3

Correlation Coefficient

Broadcom  SentinelOne

Very good diversification

The 3 months correlation between Broadcom and SentinelOne is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and Broadcom 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 Broadcom 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 Broadcom i.e., Broadcom and SentinelOne go up and down completely randomly.

Pair Corralation between Broadcom and SentinelOne

Given the investment horizon of 90 days Broadcom is expected to generate 0.74 times more return on investment than SentinelOne. However, Broadcom is 1.35 times less risky than SentinelOne. It trades about 0.31 of its potential returns per unit of risk. SentinelOne is currently generating about -0.01 per unit of risk. If you would invest  20,433  in Broadcom on May 7, 2025 and sell it today you would earn a total of  9,339  from holding Broadcom or generate 45.71% return on investment over 90 days.

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

Broadcom  vs.  SentinelOne

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Broadcom displayed solid returns over the last few months and may actually be approaching a breakup point.

SentinelOne

Risk-Adjusted Performance

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 comparatively stable basic indicators, SentinelOne 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 Broadcom and SentinelOne

The main advantage of trading using opposite Broadcom and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadcom 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 Broadcom 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.