Correlation Between SoFi Technologies and Snowflake
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Snowflake 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 Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Snowflake, you can compare the effects of market volatilities on SoFi Technologies and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Snowflake.
Diversification Opportunities for SoFi Technologies and Snowflake
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SoFi and Snowflake is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Snowflake go up and down completely randomly.
Pair Corralation between SoFi Technologies and Snowflake
Given the investment horizon of 90 days SoFi Technologies is expected to generate 4.46 times less return on investment than Snowflake. In addition to that, SoFi Technologies is 1.97 times more volatile than Snowflake. It trades about 0.04 of its total potential returns per unit of risk. Snowflake is currently generating about 0.35 per unit of volatility. If you would invest 16,103 in Snowflake on November 9, 2024 and sell it today you would earn a total of 2,534 from holding Snowflake or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Technologies vs. Snowflake
Performance |
| Timeline |
| SoFi Technologies |
| Snowflake |
SoFi Technologies and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Technologies and Snowflake
The main advantage of trading using opposite SoFi Technologies and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| SoFi Technologies vs. Upstart Holdings | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir Technologies Class |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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