Correlation Between SoFi Social and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both SoFi Social and IShares MSCI 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 Social and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Social 50 and iShares MSCI USA, you can compare the effects of market volatilities on SoFi Social and IShares MSCI 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 Social with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Social and IShares MSCI.
Diversification Opportunities for SoFi Social and IShares MSCI
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoFi and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Social 50 and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and SoFi Social 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 Social 50 are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of SoFi Social i.e., SoFi Social and IShares MSCI go up and down completely randomly.
Pair Corralation between SoFi Social and IShares MSCI
Given the investment horizon of 90 days SoFi Social 50 is expected to generate 2.55 times more return on investment than IShares MSCI. However, SoFi Social is 2.55 times more volatile than iShares MSCI USA. It trades about 0.1 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.09 per unit of risk. If you would invest 2,131 in SoFi Social 50 on September 3, 2024 and sell it today you would earn a total of 2,130 from holding SoFi Social 50 or generate 99.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Social 50 vs. iShares MSCI USA
Performance |
| Timeline |
| SoFi Social 50 |
| iShares MSCI USA |
SoFi Social and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Social and IShares MSCI
The main advantage of trading using opposite SoFi Social and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Social position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind SoFi Social 50 and iShares MSCI USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares MSCI vs. Invesco SP 500 | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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