Correlation Between SOFI TECHNOLOGIES and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and STMicroelectronics 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 STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and STMicroelectronics NV, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and STMicroelectronics.
Diversification Opportunities for SOFI TECHNOLOGIES and STMicroelectronics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOFI and STMicroelectronics is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and STMicroelectronics go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and STMicroelectronics
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.8 times more return on investment than STMicroelectronics. However, SOFI TECHNOLOGIES is 1.8 times more volatile than STMicroelectronics NV. It trades about 0.22 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.02 per unit of risk. If you would invest 609.00 in SOFI TECHNOLOGIES on November 1, 2024 and sell it today you would earn a total of 940.00 from holding SOFI TECHNOLOGIES or generate 154.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. STMicroelectronics NV
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| STMicroelectronics |
SOFI TECHNOLOGIES and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and STMicroelectronics
The main advantage of trading using opposite SOFI TECHNOLOGIES and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| SOFI TECHNOLOGIES vs. ARISTOCRAT LEISURE | SOFI TECHNOLOGIES vs. InPlay Oil Corp | SOFI TECHNOLOGIES vs. SINGAPORE AIRLINES | SOFI TECHNOLOGIES vs. Carnegie Clean Energy |
| STMicroelectronics vs. HANOVER INSURANCE | STMicroelectronics vs. UNIQA INSURANCE GR | STMicroelectronics vs. Zurich Insurance Group | STMicroelectronics vs. PLAYWAY SA ZY 10 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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