Correlation Between SOFI TECHNOLOGIES and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and ESSILORLUXOTTICA.
Diversification Opportunities for SOFI TECHNOLOGIES and ESSILORLUXOTTICA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SOFI and ESSILORLUXOTTICA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and ESSILORLUXOTTICA
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.53 times more return on investment than ESSILORLUXOTTICA. However, SOFI TECHNOLOGIES is 2.53 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.16 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.06 per unit of risk. If you would invest 689.00 in SOFI TECHNOLOGIES on September 3, 2024 and sell it today you would earn a total of 875.00 from holding SOFI TECHNOLOGIES or generate 127.0% 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. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| ESSILORLUXOTTICA 12ON |
SOFI TECHNOLOGIES and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and ESSILORLUXOTTICA
The main advantage of trading using opposite SOFI TECHNOLOGIES and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA'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 |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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