Correlation Between First Trust and SoFi Next
Can any of the company-specific risk be diversified away by investing in both First Trust and SoFi Next 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 First Trust and SoFi Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and SoFi Next 500, you can compare the effects of market volatilities on First Trust and SoFi Next 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 First Trust with a short position of SoFi Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SoFi Next.
Diversification Opportunities for First Trust and SoFi Next
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and SoFi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and SoFi Next 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Next 500 and First Trust 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 First Trust Dorsey are associated (or correlated) with SoFi Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Next 500 has no effect on the direction of First Trust i.e., First Trust and SoFi Next go up and down completely randomly.
Pair Corralation between First Trust and SoFi Next
Allowing for the 90-day total investment horizon First Trust is expected to generate 1.25 times less return on investment than SoFi Next. In addition to that, First Trust is 1.1 times more volatile than SoFi Next 500. It trades about 0.06 of its total potential returns per unit of risk. SoFi Next 500 is currently generating about 0.08 per unit of volatility. If you would invest 1,258 in SoFi Next 500 on November 3, 2024 and sell it today you would earn a total of 278.00 from holding SoFi Next 500 or generate 22.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
First Trust Dorsey vs. SoFi Next 500
Performance |
| Timeline |
| First Trust Dorsey |
| SoFi Next 500 |
First Trust and SoFi Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SoFi Next
The main advantage of trading using opposite First Trust and SoFi Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, SoFi Next 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 Next will offset losses from the drop in SoFi Next's long position.| First Trust vs. First Trust Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |