Correlation Between SentinelOne and Constellation Software

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

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

Diversification Opportunities for SentinelOne and Constellation Software

0.4

Correlation Coefficient

SentinelOne  Constellation Software

Very weak diversification

The 3 months correlation between SentinelOne and Constellation is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of SentinelOne i.e., SentinelOne and Constellation Software go up and down completely randomly.

Pair Corralation between SentinelOne and Constellation Software

Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.27 times more return on investment than Constellation Software. However, SentinelOne is 2.27 times more volatile than Constellation Software. It trades about 0.05 of its potential returns per unit of risk. Constellation Software is currently generating about 0.0 per unit of risk. If you would invest  1,842  in SentinelOne on April 25, 2025 and sell it today you would earn a total of  105.00  from holding SentinelOne or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

SentinelOne  vs.  Constellation Software

SentinelOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SentinelOne may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Constellation Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Constellation Software is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Constellation Software

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

The idea behind SentinelOne and Constellation Software 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.