Correlation Between SentinelOne and Extended Market

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

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

Diversification Opportunities for SentinelOne and Extended Market

-0.04

Correlation Coefficient

SentinelOne  Extended Market

Good diversification

The 3 months correlation between SentinelOne and Extended is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of SentinelOne i.e., SentinelOne and Extended Market go up and down completely randomly.

Pair Corralation between SentinelOne and Extended Market

Taking into account the 90-day investment horizon SentinelOne is expected to generate 15.01 times less return on investment than Extended Market. In addition to that, SentinelOne is 2.58 times more volatile than Extended Market Index. It trades about 0.01 of its total potential returns per unit of risk. Extended Market Index is currently generating about 0.21 per unit of volatility. If you would invest  1,855  in Extended Market Index on May 1, 2025 and sell it today you would earn a total of  258.00  from holding Extended Market Index or generate 13.91% return on investment over 90 days.

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

SentinelOne  vs.  Extended Market Index

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.

Extended Market Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Extended Market Index are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Extended Market showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Extended Market

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

The idea behind SentinelOne and Extended Market Index 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.