Correlation Between SOFI TECHNOLOGIES and Materialise
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Materialise 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 SOFI TECHNOLOGIES and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and Materialise NV, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Materialise 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 SOFI TECHNOLOGIES with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Materialise.
Diversification Opportunities for SOFI TECHNOLOGIES and Materialise
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SOFI and Materialise is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Materialise go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and Materialise
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.03 times more return on investment than Materialise. However, SOFI TECHNOLOGIES is 1.03 times more volatile than Materialise NV. It trades about 0.33 of its potential returns per unit of risk. Materialise NV is currently generating about 0.17 per unit of risk. If you would invest 719.00 in SOFI TECHNOLOGIES on September 2, 2024 and sell it today you would earn a total of 845.00 from holding SOFI TECHNOLOGIES or generate 117.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. Materialise NV
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| Materialise NV |
SOFI TECHNOLOGIES and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and Materialise
The main advantage of trading using opposite SOFI TECHNOLOGIES and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc |
| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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