Correlation Between SOFI TECHNOLOGIES and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Kaiser Aluminum 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 Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and Kaiser Aluminum, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Kaiser Aluminum.
Diversification Opportunities for SOFI TECHNOLOGIES and Kaiser Aluminum
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SOFI and Kaiser is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and Kaiser Aluminum
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.04 times more return on investment than Kaiser Aluminum. However, SOFI TECHNOLOGIES is 1.04 times more volatile than Kaiser Aluminum. It trades about 0.44 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.23 per unit of risk. If you would invest 1,048 in SOFI TECHNOLOGIES on August 28, 2024 and sell it today you would earn a total of 455.00 from holding SOFI TECHNOLOGIES or generate 43.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. Kaiser Aluminum
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| Kaiser Aluminum |
SOFI TECHNOLOGIES and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and Kaiser Aluminum
The main advantage of trading using opposite SOFI TECHNOLOGIES and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc |
| Kaiser Aluminum vs. Zoom Video Communications | Kaiser Aluminum vs. Internet Thailand PCL | Kaiser Aluminum vs. JAPAN AIRLINES | Kaiser Aluminum vs. Singapore Telecommunications 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 Stocks Directory module to find actively traded stocks across global markets.
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