Correlation Between Teradata Corp and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Teradata Corp and SOFI TECHNOLOGIES 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 Teradata Corp and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on Teradata Corp and SOFI TECHNOLOGIES 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 Teradata Corp with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and SOFI TECHNOLOGIES.
Diversification Opportunities for Teradata Corp and SOFI TECHNOLOGIES
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Teradata and SOFI is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Teradata Corp 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 Teradata Corp are associated (or correlated) with SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of Teradata Corp i.e., Teradata Corp and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Teradata Corp and SOFI TECHNOLOGIES
Assuming the 90 days horizon Teradata Corp is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Teradata Corp is 2.9 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.25 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,478 in SOFI TECHNOLOGIES on October 19, 2024 and sell it today you would lose (3.00) from holding SOFI TECHNOLOGIES or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradata Corp vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| Teradata Corp |
| SOFI TECHNOLOGIES |
Teradata Corp and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and SOFI TECHNOLOGIES
The main advantage of trading using opposite Teradata Corp and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| Teradata Corp vs. OURGAME INTHOLDL 00005 | Teradata Corp vs. FRACTAL GAMING GROUP | Teradata Corp vs. Media and Games | Teradata Corp vs. GigaMedia |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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