Correlation Between SoFi Technologies and Robinhood Markets
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Robinhood Markets 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 Robinhood Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Robinhood Markets, you can compare the effects of market volatilities on SoFi Technologies and Robinhood Markets 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 Robinhood Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Robinhood Markets.
Diversification Opportunities for SoFi Technologies and Robinhood Markets
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoFi and Robinhood is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Robinhood Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinhood Markets 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 Robinhood Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinhood Markets has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Robinhood Markets go up and down completely randomly.
Pair Corralation between SoFi Technologies and Robinhood Markets
Given the investment horizon of 90 days SoFi Technologies is expected to generate 8.19 times less return on investment than Robinhood Markets. In addition to that, SoFi Technologies is 1.24 times more volatile than Robinhood Markets. It trades about 0.04 of its total potential returns per unit of risk. Robinhood Markets is currently generating about 0.41 per unit of volatility. If you would invest 4,081 in Robinhood Markets on November 9, 2024 and sell it today you would earn a total of 1,236 from holding Robinhood Markets or generate 30.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Technologies vs. Robinhood Markets
Performance |
| Timeline |
| SoFi Technologies |
| Robinhood Markets |
SoFi Technologies and Robinhood Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Technologies and Robinhood Markets
The main advantage of trading using opposite SoFi Technologies and Robinhood Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Robinhood Markets 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 Robinhood Markets will offset losses from the drop in Robinhood Markets' long position.| SoFi Technologies vs. Upstart Holdings | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir Technologies Class |
| Robinhood Markets vs. Crowdstrike Holdings | Robinhood Markets vs. Palantir Technologies Class | Robinhood Markets vs. Cloudflare | Robinhood Markets vs. Adobe Systems Incorporated |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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