Correlation Between SentinelOne and Small Capitalization

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

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

Diversification Opportunities for SentinelOne and Small Capitalization

-0.32

Correlation Coefficient

SentinelOne  Small Capitalization

Very good diversification

The 3 months correlation between SentinelOne and Small is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Small Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Capitalization 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 Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Capitalization has no effect on the direction of SentinelOne i.e., SentinelOne and Small Capitalization go up and down completely randomly.

Pair Corralation between SentinelOne and Small Capitalization

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Small Capitalization. In addition to that, SentinelOne is 3.04 times more volatile than Small Capitalization Portfolio. It trades about -0.06 of its total potential returns per unit of risk. Small Capitalization Portfolio is currently generating about 0.16 per unit of volatility. If you would invest  550.00  in Small Capitalization Portfolio on May 21, 2025 and sell it today you would earn a total of  54.00  from holding Small Capitalization Portfolio or generate 9.82% return on investment over 90 days.

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

SentinelOne  vs.  Small Capitalization Portfolio

SentinelOne

Risk-Adjusted Performance

Weakest

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Small Capitalization

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Capitalization Portfolio are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Capitalization may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with SentinelOne and Small Capitalization

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

The idea behind SentinelOne and Small Capitalization Portfolio 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.