Correlation Between SentinelOne and WisdomTree SmallCap

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

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

Diversification Opportunities for SentinelOne and WisdomTree SmallCap

-0.25

Correlation Coefficient

SentinelOne  WisdomTree SmallCap

Very good diversification

The 3 months correlation between SentinelOne and WisdomTree is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and WisdomTree SmallCap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of SentinelOne i.e., SentinelOne and WisdomTree SmallCap go up and down completely randomly.

Pair Corralation between SentinelOne and WisdomTree SmallCap

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.34 times less return on investment than WisdomTree SmallCap. In addition to that, SentinelOne is 2.05 times more volatile than WisdomTree SmallCap Quality. It trades about 0.06 of its total potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.17 per unit of volatility. If you would invest  4,337  in WisdomTree SmallCap Quality on April 24, 2025 and sell it today you would earn a total of  611.00  from holding WisdomTree SmallCap Quality or generate 14.09% return on investment over 90 days.

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

SentinelOne  vs.  WisdomTree SmallCap Quality

SentinelOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 4 (%) 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.

WisdomTree SmallCap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SmallCap Quality are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, WisdomTree SmallCap unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and WisdomTree SmallCap

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

The idea behind SentinelOne and WisdomTree SmallCap Quality 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.