Correlation Between Koppers Holdings and SoFi Technologies
Can any of the company-specific risk be diversified away by investing in both Koppers Holdings 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 Koppers Holdings and SoFi Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koppers Holdings and SoFi Technologies, you can compare the effects of market volatilities on Koppers Holdings 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 Koppers Holdings with a short position of SoFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koppers Holdings and SoFi Technologies.
Diversification Opportunities for Koppers Holdings and SoFi Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Koppers and SoFi is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings and SoFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Technologies and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and SoFi Technologies go up and down completely randomly.
Pair Corralation between Koppers Holdings and SoFi Technologies
Considering the 90-day investment horizon Koppers Holdings is expected to generate 3.87 times less return on investment than SoFi Technologies. But when comparing it to its historical volatility, Koppers Holdings is 1.68 times less risky than SoFi Technologies. It trades about 0.04 of its potential returns per unit of risk. SoFi Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 482.00 in SoFi Technologies on August 31, 2024 and sell it today you would earn a total of 1,158 from holding SoFi Technologies or generate 240.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Koppers Holdings vs. SoFi Technologies
Performance |
| Timeline |
| Koppers Holdings |
| SoFi Technologies |
Koppers Holdings and SoFi Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koppers Holdings and SoFi Technologies
The main advantage of trading using opposite Koppers Holdings and SoFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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' long position.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
| SoFi Technologies vs. Visa Class A | SoFi Technologies vs. RLJ Lodging Trust | SoFi Technologies vs. Aquagold International | SoFi Technologies vs. Stepstone Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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