Correlation Between SentinelOne and Small Cap

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

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

Diversification Opportunities for SentinelOne and Small Cap

0.08

Correlation Coefficient

SentinelOne  Small Cap

Significant diversification

The 3 months correlation between SentinelOne and Small is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of SentinelOne i.e., SentinelOne and Small Cap go up and down completely randomly.

Pair Corralation between SentinelOne and Small Cap

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.76 times less return on investment than Small Cap. In addition to that, SentinelOne is 2.42 times more volatile than Small Cap Core. It trades about 0.05 of its total potential returns per unit of risk. Small Cap Core is currently generating about 0.2 per unit of volatility. If you would invest  1,056  in Small Cap Core on April 25, 2025 and sell it today you would earn a total of  148.00  from holding Small Cap Core or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SentinelOne  vs.  Small Cap Core

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.

Small Cap Core

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Small Cap

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

The idea behind SentinelOne and Small Cap Core 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.