Correlation Between SoFi Next and TGIF
Can any of the company-specific risk be diversified away by investing in both SoFi Next and TGIF 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 TGIF 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 TGIF, you can compare the effects of market volatilities on SoFi Next and TGIF 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 TGIF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Next and TGIF.
Diversification Opportunities for SoFi Next and TGIF
Significant diversification
The 3 months correlation between SoFi and TGIF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Next 500 and TGIF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGIF 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 TGIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGIF has no effect on the direction of SoFi Next i.e., SoFi Next and TGIF go up and down completely randomly.
Pair Corralation between SoFi Next and TGIF
If you would invest 1,463 in SoFi Next 500 on October 23, 2024 and sell it today you would earn a total of 49.00 from holding SoFi Next 500 or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.26% |
| Values | Daily Returns |
SoFi Next 500 vs. TGIF
Performance |
| Timeline |
| SoFi Next 500 |
| TGIF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SoFi Next and TGIF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Next and TGIF
The main advantage of trading using opposite SoFi Next and TGIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Next position performs unexpectedly, TGIF 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 TGIF will offset losses from the drop in TGIF's long position.The idea behind SoFi Next 500 and TGIF 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.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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