Correlation Between SentinelOne and Applied Digital

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

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

Diversification Opportunities for SentinelOne and Applied Digital

-0.62

Correlation Coefficient

SentinelOne  Applied Digital

Excellent diversification

The 3 months correlation between SentinelOne and Applied is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital 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 Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of SentinelOne i.e., SentinelOne and Applied Digital go up and down completely randomly.

Pair Corralation between SentinelOne and Applied Digital

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Applied Digital. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 3.45 times less risky than Applied Digital. The stock trades about -0.11 of its potential returns per unit of risk. The Applied Digital is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  531.00  in Applied Digital on May 12, 2025 and sell it today you would earn a total of  889.00  from holding Applied Digital or generate 167.42% return on investment over 90 days.

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

SentinelOne  vs.  Applied Digital

SentinelOne

Risk-Adjusted Performance

Weakest

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Applied Digital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Applied Digital

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

The idea behind SentinelOne and Applied Digital 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.