Correlation Between United Parcel and SentinelOne

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

By analyzing existing cross correlation between United Parcel Service and SentinelOne, you can compare the effects of market volatilities on United Parcel and SentinelOne 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 United Parcel with a short position of SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and SentinelOne.

Diversification Opportunities for United Parcel and SentinelOne

-0.27

Correlation Coefficient

United Parcel  SentinelOne

Very good diversification

The 3 months correlation between United and SentinelOne is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and United Parcel 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 United Parcel Service are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of United Parcel i.e., United Parcel and SentinelOne go up and down completely randomly.

Pair Corralation between United Parcel and SentinelOne

Considering the 90-day investment horizon United Parcel Service is expected to generate 1.02 times more return on investment than SentinelOne. However, United Parcel is 1.02 times more volatile than SentinelOne. It trades about -0.09 of its potential returns per unit of risk. SentinelOne is currently generating about -0.25 per unit of risk. If you would invest  15,169  in United Parcel Service on January 17, 2024 and sell it today you would lose (684.00) from holding United Parcel Service or give up 4.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

United Parcel Service  vs.  SentinelOne

United Parcel Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, United Parcel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with United Parcel and SentinelOne

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

The idea behind United Parcel Service and SentinelOne 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.