Correlation Between SoFi Select and SoFi Next
Can any of the company-specific risk be diversified away by investing in both SoFi Select 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 SoFi Select and SoFi Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Select 500 and SoFi Next 500, you can compare the effects of market volatilities on SoFi Select 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 SoFi Select with a short position of SoFi Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Select and SoFi Next.
Diversification Opportunities for SoFi Select and SoFi Next
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SoFi and SoFi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Select 500 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 SoFi Select 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 SoFi Select 500 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 SoFi Select i.e., SoFi Select and SoFi Next go up and down completely randomly.
Pair Corralation between SoFi Select and SoFi Next
Considering the 90-day investment horizon SoFi Select is expected to generate 1.65 times less return on investment than SoFi Next. But when comparing it to its historical volatility, SoFi Select 500 is 1.5 times less risky than SoFi Next. It trades about 0.32 of its potential returns per unit of risk. SoFi Next 500 is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,427 in SoFi Next 500 on September 1, 2024 and sell it today you would earn a total of 152.00 from holding SoFi Next 500 or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SoFi Select 500 vs. SoFi Next 500
Performance |
| Timeline |
| SoFi Select 500 |
| SoFi Next 500 |
SoFi Select and SoFi Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Select and SoFi Next
The main advantage of trading using opposite SoFi Select and SoFi Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Select 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.| SoFi Select vs. Vanguard Growth Index | SoFi Select vs. iShares Russell 1000 | SoFi Select vs. iShares SP 500 | SoFi Select vs. iShares Core SP |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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