Correlation Between AIR PRODCHEMICALS and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and SOFI TECHNOLOGIES.
Diversification Opportunities for AIR PRODCHEMICALS and SOFI TECHNOLOGIES
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIR and SOFI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and SOFI TECHNOLOGIES
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 4.49 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 3.3 times less risky than SOFI TECHNOLOGIES. It trades about 0.42 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 1,028 in SOFI TECHNOLOGIES on September 1, 2024 and sell it today you would earn a total of 536.00 from holding SOFI TECHNOLOGIES or generate 52.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| SOFI TECHNOLOGIES |
AIR PRODCHEMICALS and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and SOFI TECHNOLOGIES
The main advantage of trading using opposite AIR PRODCHEMICALS and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. SIVERS SEMICONDUCTORS AB | AIR PRODCHEMICALS vs. Darden Restaurants | AIR PRODCHEMICALS vs. Reliance Steel Aluminum | AIR PRODCHEMICALS vs. Q2M Managementberatung AG |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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