Correlation Between Invesco NASDAQ and SoFi Select
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ 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 Invesco NASDAQ and SoFi Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ 100 and SoFi Select 500, you can compare the effects of market volatilities on Invesco NASDAQ 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 Invesco NASDAQ with a short position of SoFi Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and SoFi Select.
Diversification Opportunities for Invesco NASDAQ and SoFi Select
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and SoFi is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ 100 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 Invesco NASDAQ 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 Invesco NASDAQ 100 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 Invesco NASDAQ i.e., Invesco NASDAQ and SoFi Select go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and SoFi Select
Given the investment horizon of 90 days Invesco NASDAQ is expected to generate 2.52 times less return on investment than SoFi Select. In addition to that, Invesco NASDAQ is 1.03 times more volatile than SoFi Select 500. It trades about 0.05 of its total potential returns per unit of risk. SoFi Select 500 is currently generating about 0.12 per unit of volatility. If you would invest 10,763 in SoFi Select 500 on August 30, 2024 and sell it today you would earn a total of 315.00 from holding SoFi Select 500 or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ 100 vs. SoFi Select 500
Performance |
| Timeline |
| Invesco NASDAQ 100 |
| SoFi Select 500 |
Invesco NASDAQ and SoFi Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and SoFi Select
The main advantage of trading using opposite Invesco NASDAQ and SoFi Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ 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.| Invesco NASDAQ vs. Invesco NASDAQ Next | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. Schwab Dividend Equity |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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