Correlation Between SOFI TECHNOLOGIES and INNOVATEC SPA
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and INNOVATEC SPA 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 INNOVATEC SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and INNOVATEC SPA, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and INNOVATEC SPA 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 INNOVATEC SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and INNOVATEC SPA.
Diversification Opportunities for SOFI TECHNOLOGIES and INNOVATEC SPA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOFI and INNOVATEC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and INNOVATEC SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOVATEC SPA 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 INNOVATEC SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOVATEC SPA has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and INNOVATEC SPA go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and INNOVATEC SPA
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.04 times more return on investment than INNOVATEC SPA. However, SOFI TECHNOLOGIES is 1.04 times more volatile than INNOVATEC SPA. It trades about 0.1 of its potential returns per unit of risk. INNOVATEC SPA is currently generating about 0.0 per unit of risk. If you would invest 636.00 in SOFI TECHNOLOGIES on September 14, 2024 and sell it today you would earn a total of 860.00 from holding SOFI TECHNOLOGIES or generate 135.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. INNOVATEC SPA
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| INNOVATEC SPA |
SOFI TECHNOLOGIES and INNOVATEC SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and INNOVATEC SPA
The main advantage of trading using opposite SOFI TECHNOLOGIES and INNOVATEC SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, INNOVATEC SPA 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 INNOVATEC SPA will offset losses from the drop in INNOVATEC SPA's long position.| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc |
| INNOVATEC SPA vs. ITALIAN WINE BRANDS | INNOVATEC SPA vs. Amkor Technology | INNOVATEC SPA vs. LION ONE METALS | INNOVATEC SPA vs. SOFI TECHNOLOGIES |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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