Correlation Between IShares SP and SoFi Select
Can any of the company-specific risk be diversified away by investing in both IShares SP and SoFi Select 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 IShares SP and SoFi Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and SoFi Select 500, you can compare the effects of market volatilities on IShares SP and SoFi Select 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 IShares SP with a short position of SoFi Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and SoFi Select.
Diversification Opportunities for IShares SP and SoFi Select
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and SoFi is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and SoFi Select 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Select 500 and IShares SP 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 iShares SP 500 are associated (or correlated) with SoFi Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Select 500 has no effect on the direction of IShares SP i.e., IShares SP and SoFi Select go up and down completely randomly.
Pair Corralation between IShares SP and SoFi Select
Considering the 90-day investment horizon iShares SP 500 is expected to generate 1.06 times more return on investment than SoFi Select. However, IShares SP is 1.06 times more volatile than SoFi Select 500. It trades about 0.11 of its potential returns per unit of risk. SoFi Select 500 is currently generating about 0.11 per unit of risk. If you would invest 5,993 in iShares SP 500 on August 30, 2024 and sell it today you would earn a total of 4,001 from holding iShares SP 500 or generate 66.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. SoFi Select 500
Performance |
| Timeline |
| iShares SP 500 |
| SoFi Select 500 |
IShares SP and SoFi Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and SoFi Select
The main advantage of trading using opposite IShares SP and SoFi Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, SoFi Select 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 Select will offset losses from the drop in SoFi Select's long position.| IShares SP vs. FT Vest Equity | IShares SP vs. Northern Lights | IShares SP vs. Dimensional International High | IShares SP vs. First Trust Exchange Traded |
| SoFi Select vs. Berry Petroleum Corp | SoFi Select vs. Comstock Resources | SoFi Select vs. SoFi Next 500 | SoFi Select vs. SM Energy Co |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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