Correlation Between Roundhill Investments and SoFi Social
Can any of the company-specific risk be diversified away by investing in both Roundhill Investments and SoFi Social 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 Roundhill Investments and SoFi Social into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Investments and SoFi Social 50, you can compare the effects of market volatilities on Roundhill Investments and SoFi Social 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 Roundhill Investments with a short position of SoFi Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Investments and SoFi Social.
Diversification Opportunities for Roundhill Investments and SoFi Social
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Roundhill and SoFi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments and SoFi Social 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Social 50 and Roundhill Investments 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 Roundhill Investments are associated (or correlated) with SoFi Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Social 50 has no effect on the direction of Roundhill Investments i.e., Roundhill Investments and SoFi Social go up and down completely randomly.
Pair Corralation between Roundhill Investments and SoFi Social
Given the investment horizon of 90 days Roundhill Investments is expected to under-perform the SoFi Social. But the etf apears to be less risky and, when comparing its historical volatility, Roundhill Investments is 1.12 times less risky than SoFi Social. The etf trades about -0.05 of its potential returns per unit of risk. The SoFi Social 50 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,377 in SoFi Social 50 on October 25, 2024 and sell it today you would earn a total of 2,106 from holding SoFi Social 50 or generate 88.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 23.89% |
| Values | Daily Returns |
Roundhill Investments vs. SoFi Social 50
Performance |
| Timeline |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SoFi Social 50 |
Roundhill Investments and SoFi Social Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Investments and SoFi Social
The main advantage of trading using opposite Roundhill Investments and SoFi Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Investments position performs unexpectedly, SoFi Social 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 Social will offset losses from the drop in SoFi Social's long position.The idea behind Roundhill Investments and SoFi Social 50 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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