Correlation Between SentinelOne and SMC Corp

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

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

Diversification Opportunities for SentinelOne and SMC Corp

0.14

Correlation Coefficient

SentinelOne  SMC Corp

Average diversification

The 3 months correlation between SentinelOne and SMC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and SMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp has no effect on the direction of SentinelOne i.e., SentinelOne and SMC Corp go up and down completely randomly.

Pair Corralation between SentinelOne and SMC Corp

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the SMC Corp. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.46 times less risky than SMC Corp. The stock trades about -0.02 of its potential returns per unit of risk. The SMC Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  32,875  in SMC Corp on May 4, 2025 and sell it today you would earn a total of  2,725  from holding SMC Corp or generate 8.29% return on investment over 90 days.

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

SentinelOne  vs.  SMC Corp

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

SMC Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, SMC Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and SMC Corp

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

The idea behind SentinelOne and SMC Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.