Correlation Between SoFi Technologies and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Lumen Technologies 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 Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Lumen Technologies, you can compare the effects of market volatilities on SoFi Technologies and Lumen Technologies 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 Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Lumen Technologies.
Diversification Opportunities for SoFi Technologies and Lumen Technologies
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoFi and Lumen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Lumen Technologies go up and down completely randomly.
Pair Corralation between SoFi Technologies and Lumen Technologies
Given the investment horizon of 90 days SoFi Technologies is expected to generate 0.53 times more return on investment than Lumen Technologies. However, SoFi Technologies is 1.9 times less risky than Lumen Technologies. It trades about 0.6 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.14 per unit of risk. If you would invest 1,117 in SoFi Technologies on September 1, 2024 and sell it today you would earn a total of 524.00 from holding SoFi Technologies or generate 46.91% 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. Lumen Technologies
Performance |
| Timeline |
| SoFi Technologies |
| Lumen Technologies |
SoFi Technologies and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Technologies and Lumen Technologies
The main advantage of trading using opposite SoFi Technologies and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| SoFi Technologies vs. 360 Finance | SoFi Technologies vs. Atlanticus Holdings | SoFi Technologies vs. Qudian Inc | SoFi Technologies vs. Enova International |
| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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