Correlation Between SoFi Next and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both SoFi Next and Exchange Traded 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 Next and Exchange Traded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Next 500 and Exchange Traded Concepts, you can compare the effects of market volatilities on SoFi Next and Exchange Traded 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 Next with a short position of Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Next and Exchange Traded.
Diversification Opportunities for SoFi Next and Exchange Traded
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoFi and Exchange is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Next 500 and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and SoFi Next 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 Next 500 are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of SoFi Next i.e., SoFi Next and Exchange Traded go up and down completely randomly.
Pair Corralation between SoFi Next and Exchange Traded
If you would invest 1,210 in SoFi Next 500 on August 29, 2024 and sell it today you would earn a total of 358.00 from holding SoFi Next 500 or generate 29.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.32% |
| Values | Daily Returns |
SoFi Next 500 vs. Exchange Traded Concepts
Performance |
| Timeline |
| SoFi Next 500 |
| Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SoFi Next and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Next and Exchange Traded
The main advantage of trading using opposite SoFi Next and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Next position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded's long position.The idea behind SoFi Next 500 and Exchange Traded Concepts 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.| Exchange Traded vs. Cambria Trinity ETF | Exchange Traded vs. Northern Lights | Exchange Traded vs. Cambria Global Momentum | Exchange Traded vs. Alpha Architect Value |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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