Correlation Between SentinelOne and Wormhole

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

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

Diversification Opportunities for SentinelOne and Wormhole

0.72

Correlation Coefficient

SentinelOne  Wormhole

Poor diversification

The 3 months correlation between SentinelOne and Wormhole is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Wormhole in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wormhole 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 Wormhole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wormhole has no effect on the direction of SentinelOne i.e., SentinelOne and Wormhole go up and down completely randomly.

Pair Corralation between SentinelOne and Wormhole

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Wormhole. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 2.5 times less risky than Wormhole. The stock trades about -0.02 of its potential returns per unit of risk. The Wormhole is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.70  in Wormhole on May 4, 2025 and sell it today you would lose (0.33) from holding Wormhole or give up 4.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

SentinelOne  vs.  Wormhole

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.

Wormhole

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wormhole are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Wormhole may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with SentinelOne and Wormhole

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

The idea behind SentinelOne and Wormhole 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.