Correlation Between SoFi Technologies and Ally Financial
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Ally Financial 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 Technologies and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Ally Financial, you can compare the effects of market volatilities on SoFi Technologies and Ally Financial 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 Technologies with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Ally Financial.
Diversification Opportunities for SoFi Technologies and Ally Financial
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between SoFi and Ally is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and SoFi Technologies 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 Technologies are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Ally Financial go up and down completely randomly.
Pair Corralation between SoFi Technologies and Ally Financial
Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.61 times more return on investment than Ally Financial. However, SoFi Technologies is 1.61 times more volatile than Ally Financial. It trades about 0.1 of its potential returns per unit of risk. Ally Financial is currently generating about 0.06 per unit of risk. If you would invest 729.00 in SoFi Technologies on August 26, 2024 and sell it today you would earn a total of 831.00 from holding SoFi Technologies or generate 113.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Technologies vs. Ally Financial
Performance |
| Timeline |
| SoFi Technologies |
| Ally Financial |
SoFi Technologies and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Technologies and Ally Financial
The main advantage of trading using opposite SoFi Technologies and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| SoFi Technologies vs. Upstart Holdings | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir Technologies |
| Ally Financial vs. American Express | Ally Financial vs. Mastercard | Ally Financial vs. Visa Class A | Ally Financial vs. PayPal Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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