Correlation Between PKSHA TECHNOLOGY and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY and SOFI TECHNOLOGIES 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 PKSHA TECHNOLOGY and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and SOFI TECHNOLOGIES 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 PKSHA TECHNOLOGY with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and SOFI TECHNOLOGIES.
Diversification Opportunities for PKSHA TECHNOLOGY and SOFI TECHNOLOGIES
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PKSHA and SOFI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC are associated (or correlated) with SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and SOFI TECHNOLOGIES
Assuming the 90 days horizon PKSHA TECHNOLOGY is expected to generate 2.79 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, PKSHA TECHNOLOGY INC is 1.11 times less risky than SOFI TECHNOLOGIES. It trades about 0.13 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 735.00 in SOFI TECHNOLOGIES on August 29, 2024 and sell it today you would earn a total of 772.00 from holding SOFI TECHNOLOGIES or generate 105.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| SOFI TECHNOLOGIES |
PKSHA TECHNOLOGY and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and SOFI TECHNOLOGIES
The main advantage of trading using opposite PKSHA TECHNOLOGY and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| PKSHA TECHNOLOGY vs. Broadcom | PKSHA TECHNOLOGY vs. ALTAIR RES INC | PKSHA TECHNOLOGY vs. Westinghouse Air Brake | PKSHA TECHNOLOGY vs. TRAINLINE PLC LS |
| SOFI TECHNOLOGIES vs. AIR PRODCHEMICALS | SOFI TECHNOLOGIES vs. PennyMac Mortgage Investment | SOFI TECHNOLOGIES vs. Gladstone Investment | SOFI TECHNOLOGIES vs. Strategic Investments AS |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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