Correlation Between SOFI TECHNOLOGIES and Hill Smith
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Hill Smith 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 Hill Smith into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and Hill Smith Holdings, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Hill Smith 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 Hill Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Hill Smith.
Diversification Opportunities for SOFI TECHNOLOGIES and Hill Smith
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOFI and Hill is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Hill Smith Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hill Smith Holdings 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 Hill Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hill Smith Holdings has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Hill Smith go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and Hill Smith
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.07 times more return on investment than Hill Smith. However, SOFI TECHNOLOGIES is 2.07 times more volatile than Hill Smith Holdings. It trades about 0.0 of its potential returns per unit of risk. Hill Smith Holdings is currently generating about -0.08 per unit of risk. If you would invest 1,100 in SOFI TECHNOLOGIES on January 11, 2025 and sell it today you would lose (60.00) from holding SOFI TECHNOLOGIES or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. Hill Smith Holdings
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| Hill Smith Holdings |
SOFI TECHNOLOGIES and Hill Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and Hill Smith
The main advantage of trading using opposite SOFI TECHNOLOGIES and Hill Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, Hill Smith 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 Hill Smith will offset losses from the drop in Hill Smith's long position.| SOFI TECHNOLOGIES vs. REINET INVESTMENTS SCA | SOFI TECHNOLOGIES vs. China Foods Limited | SOFI TECHNOLOGIES vs. ScanSource | SOFI TECHNOLOGIES vs. CHRYSALIS INVESTMENTS LTD |
| Hill Smith vs. MAG SILVER | Hill Smith vs. Japan Asia Investment | Hill Smith vs. BJs Restaurants | Hill Smith vs. Perseus Mining Limited |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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