Correlation Between SoFi Next and KBND
Can any of the company-specific risk be diversified away by investing in both SoFi Next and KBND 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 KBND 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 KBND, you can compare the effects of market volatilities on SoFi Next and KBND 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 KBND. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Next and KBND.
Diversification Opportunities for SoFi Next and KBND
Pay attention - limited upside
The 3 months correlation between SoFi and KBND is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Next 500 and KBND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBND 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 KBND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBND has no effect on the direction of SoFi Next i.e., SoFi Next and KBND go up and down completely randomly.
Pair Corralation between SoFi Next and KBND
If you would invest (100.00) in KBND on November 28, 2024 and sell it today you would earn a total of 100.00 from holding KBND or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
SoFi Next 500 vs. KBND
Performance |
| Timeline |
| SoFi Next 500 |
| KBND |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
SoFi Next and KBND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Next and KBND
The main advantage of trading using opposite SoFi Next and KBND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Next position performs unexpectedly, KBND 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 KBND will offset losses from the drop in KBND's long position.The idea behind SoFi Next 500 and KBND 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.| KBND vs. VanEck China Bond | KBND vs. KraneShares Asia Pacific | KBND vs. KraneShares MSCI All | KBND vs. First Trust Long |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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