Correlation Between SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOFI and AAC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.27 times more return on investment than AAC TECHNOLOGHLDGADR. However, SOFI TECHNOLOGIES is 1.27 times more volatile than AAC TECHNOLOGHLDGADR. It trades about 0.08 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.06 per unit of risk. If you would invest 418.00 in SOFI TECHNOLOGIES on September 3, 2024 and sell it today you would earn a total of 1,146 from holding SOFI TECHNOLOGIES or generate 274.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| AAC TECHNOLOGHLDGADR |
SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite SOFI TECHNOLOGIES and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| SOFI TECHNOLOGIES vs. Scientific Games | SOFI TECHNOLOGIES vs. VIAPLAY GROUP AB | SOFI TECHNOLOGIES vs. Universal Display | SOFI TECHNOLOGIES vs. Playa Hotels Resorts |
| AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Motorola Solutions | AAC TECHNOLOGHLDGADR vs. Nokia |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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