Correlation Between SentinelOne and Simpson Manufacturing

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

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

Diversification Opportunities for SentinelOne and Simpson Manufacturing

0.16

Correlation Coefficient

SentinelOne  Simpson Manufacturing

Average diversification

The 3 months correlation between SentinelOne and Simpson is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing 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 Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of SentinelOne i.e., SentinelOne and Simpson Manufacturing go up and down completely randomly.

Pair Corralation between SentinelOne and Simpson Manufacturing

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.5 times more return on investment than Simpson Manufacturing. However, SentinelOne is 1.5 times more volatile than Simpson Manufacturing. It trades about -0.01 of its potential returns per unit of risk. Simpson Manufacturing is currently generating about -0.1 per unit of risk. If you would invest  1,701  in SentinelOne on August 16, 2025 and sell it today you would lose (50.00) from holding SentinelOne or give up 2.94% of portfolio value over 90 days.

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

SentinelOne  vs.  Simpson Manufacturing

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 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.

Simpson Manufacturing

Risk-Adjusted Performance

Weakest

Over the last 90 days Simpson Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SentinelOne and Simpson Manufacturing

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

The idea behind SentinelOne and Simpson Manufacturing 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.