Correlation Between SOFI TECHNOLOGIES and MSCI WORLD
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and MSCI WORLD 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 MSCI WORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and MSCI WORLD CLIMATE, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and MSCI WORLD 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 MSCI WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and MSCI WORLD.
Diversification Opportunities for SOFI TECHNOLOGIES and MSCI WORLD
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SOFI and MSCI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and MSCI WORLD CLIMATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI WORLD CLIMATE 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 MSCI WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI WORLD CLIMATE has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and MSCI WORLD go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and MSCI WORLD
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 0.87 times more return on investment than MSCI WORLD. However, SOFI TECHNOLOGIES is 1.15 times less risky than MSCI WORLD. It trades about 0.25 of its potential returns per unit of risk. MSCI WORLD CLIMATE is currently generating about -0.09 per unit of risk. If you would invest 1,314 in SOFI TECHNOLOGIES on September 12, 2024 and sell it today you would earn a total of 171.00 from holding SOFI TECHNOLOGIES or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. MSCI WORLD CLIMATE
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| MSCI WORLD CLIMATE |
SOFI TECHNOLOGIES and MSCI WORLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and MSCI WORLD
The main advantage of trading using opposite SOFI TECHNOLOGIES and MSCI WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, MSCI WORLD 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 MSCI WORLD will offset losses from the drop in MSCI WORLD's long position.| SOFI TECHNOLOGIES vs. XLMedia PLC | SOFI TECHNOLOGIES vs. ZINC MEDIA GR | SOFI TECHNOLOGIES vs. Dave Busters Entertainment | SOFI TECHNOLOGIES vs. CNVISION MEDIA |
| MSCI WORLD vs. Lion Biotechnologies | MSCI WORLD vs. BANKINTER ADR 2007 | MSCI WORLD vs. SOFI TECHNOLOGIES | MSCI WORLD vs. ALIOR BANK |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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