Correlation Between Science Applications and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and SOFI TECHNOLOGIES.
Diversification Opportunities for Science Applications and SOFI TECHNOLOGIES
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Science and SOFI is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Science Applications and SOFI TECHNOLOGIES
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Science Applications International is 1.31 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.09 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,339 in SOFI TECHNOLOGIES on September 19, 2024 and sell it today you would earn a total of 237.00 from holding SOFI TECHNOLOGIES or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| Science Applications |
| SOFI TECHNOLOGIES |
Science Applications and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and SOFI TECHNOLOGIES
The main advantage of trading using opposite Science Applications and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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