Correlation Between SOFI TECHNOLOGIES and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and SCOTT TECHNOLOGY.
Diversification Opportunities for SOFI TECHNOLOGIES and SCOTT TECHNOLOGY
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOFI and SCOTT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and SCOTT TECHNOLOGY
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 0.8 times more return on investment than SCOTT TECHNOLOGY. However, SOFI TECHNOLOGIES is 1.25 times less risky than SCOTT TECHNOLOGY. It trades about 0.26 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.13 per unit of risk. If you would invest 1,305 in SOFI TECHNOLOGIES on September 13, 2024 and sell it today you would earn a total of 180.00 from holding SOFI TECHNOLOGIES or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| SCOTT TECHNOLOGY |
SOFI TECHNOLOGIES and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and SCOTT TECHNOLOGY
The main advantage of trading using opposite SOFI TECHNOLOGIES and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| SOFI TECHNOLOGIES vs. Sportsmans Warehouse Holdings | SOFI TECHNOLOGIES vs. Live Nation Entertainment | SOFI TECHNOLOGIES vs. CNVISION MEDIA | SOFI TECHNOLOGIES vs. EEDUCATION ALBERT AB |
| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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