Correlation Between SentinelOne and Principal Small

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

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

Diversification Opportunities for SentinelOne and Principal Small

0.2

Correlation Coefficient

SentinelOne  Principal Small

Modest diversification

The 3 months correlation between SentinelOne and Principal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Principal Small Cap Multi Fact in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Small Cap 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 Principal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Small Cap has no effect on the direction of SentinelOne i.e., SentinelOne and Principal Small go up and down completely randomly.

Pair Corralation between SentinelOne and Principal Small

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.35 times less return on investment than Principal Small. In addition to that, SentinelOne is 2.15 times more volatile than Principal Small Cap Multi Factor. It trades about 0.08 of its total potential returns per unit of risk. Principal Small Cap Multi Factor is currently generating about 0.24 per unit of volatility. If you would invest  4,477  in Principal Small Cap Multi Factor on April 20, 2025 and sell it today you would earn a total of  828.00  from holding Principal Small Cap Multi Factor or generate 18.49% return on investment over 90 days.

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

SentinelOne  vs.  Principal Small Cap Multi Fact

SentinelOne

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Principal Small Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Small Cap Multi Factor are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Principal Small exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Principal Small

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

The idea behind SentinelOne and Principal Small Cap Multi Factor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..