Correlation Between SPDR SP and SoFi Next
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SoFi Next 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 SPDR SP and SoFi Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and SoFi Next 500, you can compare the effects of market volatilities on SPDR SP and SoFi Next 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 SPDR SP with a short position of SoFi Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SoFi Next.
Diversification Opportunities for SPDR SP and SoFi Next
Almost no diversification
The 3 months correlation between SPDR and SoFi is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SoFi Next 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Next 500 and SPDR SP 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 SPDR SP 500 are associated (or correlated) with SoFi Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Next 500 has no effect on the direction of SPDR SP i.e., SPDR SP and SoFi Next go up and down completely randomly.
Pair Corralation between SPDR SP and SoFi Next
Considering the 90-day investment horizon SPDR SP is expected to generate 3.11 times less return on investment than SoFi Next. But when comparing it to its historical volatility, SPDR SP 500 is 1.72 times less risky than SoFi Next. It trades about 0.15 of its potential returns per unit of risk. SoFi Next 500 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,428 in SoFi Next 500 on August 26, 2024 and sell it today you would earn a total of 130.00 from holding SoFi Next 500 or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. SoFi Next 500
Performance |
| Timeline |
| SPDR SP 500 |
| SoFi Next 500 |
SPDR SP and SoFi Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SoFi Next
The main advantage of trading using opposite SPDR SP and SoFi Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SoFi Next 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 SoFi Next will offset losses from the drop in SoFi Next's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| SoFi Next vs. Vanguard Mid Cap Index | SoFi Next vs. Vanguard Extended Market | SoFi Next vs. iShares Core SP | SoFi Next vs. SPDR SP MIDCAP |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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