Correlation Between Entravision Communications and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Entravision Communications 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 Entravision Communications and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on Entravision Communications 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 Entravision Communications with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and SOFI TECHNOLOGIES.
Diversification Opportunities for Entravision Communications and SOFI TECHNOLOGIES
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Entravision and SOFI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Entravision Communications and SOFI TECHNOLOGIES
Assuming the 90 days horizon Entravision Communications is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Entravision Communications is 1.03 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.02 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 662.00 in SOFI TECHNOLOGIES on November 7, 2024 and sell it today you would earn a total of 815.00 from holding SOFI TECHNOLOGIES or generate 123.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| Entravision Communications |
| SOFI TECHNOLOGIES |
Entravision Communications and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and SOFI TECHNOLOGIES
The main advantage of trading using opposite Entravision Communications and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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.| Entravision Communications vs. Gladstone Investment | Entravision Communications vs. GLG LIFE TECH | Entravision Communications vs. Easy Software AG | Entravision Communications vs. New Residential Investment |
| SOFI TECHNOLOGIES vs. PLAYTIKA HOLDING DL 01 | SOFI TECHNOLOGIES vs. COLUMBIA SPORTSWEAR | SOFI TECHNOLOGIES vs. GALENA MINING LTD | SOFI TECHNOLOGIES vs. USWE SPORTS AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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