Correlation Between SOFI TECHNOLOGIES and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and GAMESTOP 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 GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and GAMESTOP, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and GAMESTOP.
Diversification Opportunities for SOFI TECHNOLOGIES and GAMESTOP
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SOFI and GAMESTOP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and GAMESTOP go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and GAMESTOP
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to under-perform the GAMESTOP. But the stock apears to be less risky and, when comparing its historical volatility, SOFI TECHNOLOGIES is 1.2 times less risky than GAMESTOP. The stock trades about -0.11 of its potential returns per unit of risk. The GAMESTOP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,712 in GAMESTOP on October 17, 2024 and sell it today you would lose (7.00) from holding GAMESTOP or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. GAMESTOP
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| GAMESTOP |
SOFI TECHNOLOGIES and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and GAMESTOP
The main advantage of trading using opposite SOFI TECHNOLOGIES and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.| SOFI TECHNOLOGIES vs. UNIVERSAL MUSIC GROUP | SOFI TECHNOLOGIES vs. Western Copper and | SOFI TECHNOLOGIES vs. Perseus Mining Limited | SOFI TECHNOLOGIES vs. ARDAGH METAL PACDL 0001 |
| GAMESTOP vs. Meiko Electronics Co | GAMESTOP vs. Electronic Arts | GAMESTOP vs. Goosehead Insurance | GAMESTOP vs. TT Electronics PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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