Correlation Between SentinelOne and Simplify Volatility

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

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

Diversification Opportunities for SentinelOne and Simplify Volatility

0.35

Correlation Coefficient

SentinelOne  Simplify Volatility

Weak diversification

The 3 months correlation between SentinelOne and Simplify is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility 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 Simplify Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of SentinelOne i.e., SentinelOne and Simplify Volatility go up and down completely randomly.

Pair Corralation between SentinelOne and Simplify Volatility

Taking into account the 90-day investment horizon SentinelOne is expected to generate 2.9 times less return on investment than Simplify Volatility. But when comparing it to its historical volatility, SentinelOne is 1.04 times less risky than Simplify Volatility. It trades about 0.01 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,652  in Simplify Volatility Premium on May 2, 2025 and sell it today you would earn a total of  49.00  from holding Simplify Volatility Premium or generate 2.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SentinelOne  vs.  Simplify Volatility Premium

SentinelOne

Risk-Adjusted Performance

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.

Simplify Volatility

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volatility Premium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Simplify Volatility is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SentinelOne and Simplify Volatility

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

The idea behind SentinelOne and Simplify Volatility Premium 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.