Correlation Between SoFi Technologies and Western Union
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Western Union 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 Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Western Union Co, you can compare the effects of market volatilities on SoFi Technologies and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Western Union.
Diversification Opportunities for SoFi Technologies and Western Union
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SoFi and Western is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Western Union go up and down completely randomly.
Pair Corralation between SoFi Technologies and Western Union
Given the investment horizon of 90 days SoFi Technologies is expected to generate 2.81 times more return on investment than Western Union. However, SoFi Technologies is 2.81 times more volatile than Western Union Co. It trades about 0.27 of its potential returns per unit of risk. Western Union Co is currently generating about -0.1 per unit of risk. If you would invest 827.00 in SoFi Technologies on October 7, 2024 and sell it today you would earn a total of 657.00 from holding SoFi Technologies or generate 79.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Technologies vs. Western Union Co
Performance |
| Timeline |
| SoFi Technologies |
| Western Union |
SoFi Technologies and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Technologies and Western Union
The main advantage of trading using opposite SoFi Technologies and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.| SoFi Technologies vs. Upstart Holdings | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir Technologies Class |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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