Correlation Between SOFI TECHNOLOGIES and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and Meta Platforms, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Meta Platforms.
Diversification Opportunities for SOFI TECHNOLOGIES and Meta Platforms
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOFI and Meta is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Meta Platforms go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and Meta Platforms
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.43 times more return on investment than Meta Platforms. However, SOFI TECHNOLOGIES is 2.43 times more volatile than Meta Platforms. It trades about 0.61 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.19 per unit of risk. If you would invest 1,021 in SOFI TECHNOLOGIES on September 3, 2024 and sell it today you would earn a total of 543.00 from holding SOFI TECHNOLOGIES or generate 53.18% 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. Meta Platforms
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| Meta Platforms |
SOFI TECHNOLOGIES and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and Meta Platforms
The main advantage of trading using opposite SOFI TECHNOLOGIES and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| SOFI TECHNOLOGIES vs. Scientific Games | SOFI TECHNOLOGIES vs. VIAPLAY GROUP AB | SOFI TECHNOLOGIES vs. Universal Display | SOFI TECHNOLOGIES vs. Playa Hotels Resorts |
| Meta Platforms vs. TOTAL GABON | Meta Platforms vs. Walgreens Boots Alliance | Meta Platforms vs. Peak Resources 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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