Correlation Between SentinelOne and Methode Electronics

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

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

Diversification Opportunities for SentinelOne and Methode Electronics

-0.36

Correlation Coefficient

SentinelOne  Methode Electronics

Very good diversification

The 3 months correlation between SentinelOne and Methode is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of SentinelOne i.e., SentinelOne and Methode Electronics go up and down completely randomly.

Pair Corralation between SentinelOne and Methode Electronics

Taking into account the 90-day investment horizon SentinelOne is expected to generate 4.29 times less return on investment than Methode Electronics. But when comparing it to its historical volatility, SentinelOne is 1.67 times less risky than Methode Electronics. It trades about 0.01 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  661.00  in Methode Electronics on May 2, 2025 and sell it today you would earn a total of  6.00  from holding Methode Electronics or generate 0.91% return on investment over 90 days.

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

SentinelOne  vs.  Methode Electronics

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Methode Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Methode Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Methode Electronics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SentinelOne and Methode Electronics

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

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