Correlation Between SentinelOne and Avista

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

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

Diversification Opportunities for SentinelOne and Avista

-0.46

Correlation Coefficient

SentinelOne  Avista

Very good diversification

The 3 months correlation between SentinelOne and Avista is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Avista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avista 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 Avista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avista has no effect on the direction of SentinelOne i.e., SentinelOne and Avista go up and down completely randomly.

Pair Corralation between SentinelOne and Avista

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.79 times more return on investment than Avista. However, SentinelOne is 1.79 times more volatile than Avista. It trades about -0.01 of its potential returns per unit of risk. Avista is currently generating about -0.02 per unit of risk. If you would invest  2,636  in SentinelOne on August 19, 2024 and sell it today you would lose (25.00) from holding SentinelOne or give up 0.95% 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.  Avista

SentinelOne

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SentinelOne may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Avista

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avista has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avista is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Avista

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

The idea behind SentinelOne and Avista 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.