Correlation Between SentinelOne and Sprouts Farmers

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

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

Diversification Opportunities for SentinelOne and Sprouts Farmers

-0.73

Correlation Coefficient

SentinelOne  Sprouts Farmers

Pay attention - limited upside

The 3 months correlation between SentinelOne and Sprouts is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Sprouts Farmers Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprouts Farmers Market 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 Sprouts Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprouts Farmers Market has no effect on the direction of SentinelOne i.e., SentinelOne and Sprouts Farmers go up and down completely randomly.

Pair Corralation between SentinelOne and Sprouts Farmers

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Sprouts Farmers. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.29 times less risky than Sprouts Farmers. The stock trades about -0.09 of its potential returns per unit of risk. The Sprouts Farmers Market is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  6,329  in Sprouts Farmers Market on February 3, 2024 and sell it today you would earn a total of  871.00  from holding Sprouts Farmers Market or generate 13.76% return on investment over 90 days.

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

SentinelOne  vs.  Sprouts Farmers Market

SentinelOne

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sprouts Farmers Market

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprouts Farmers Market are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Sprouts Farmers displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Sprouts Farmers

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

The idea behind SentinelOne and Sprouts Farmers Market 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 Global Correlations module to find global opportunities by holding instruments from different markets.