Correlation Between ASPEN TECHINC and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC and SOFI 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 ASPEN TECHINC and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on ASPEN TECHINC and SOFI 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 ASPEN TECHINC with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and SOFI TECHNOLOGIES.
Diversification Opportunities for ASPEN TECHINC and SOFI TECHNOLOGIES
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ASPEN and SOFI is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and ASPEN TECHINC 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 ASPEN TECHINC DL are associated (or correlated) with SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and SOFI TECHNOLOGIES
Assuming the 90 days horizon ASPEN TECHINC is expected to generate 4.54 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, ASPEN TECHINC DL is 1.97 times less risky than SOFI TECHNOLOGIES. It trades about 0.19 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,048 in SOFI TECHNOLOGIES on August 28, 2024 and sell it today you would earn a total of 455.00 from holding SOFI TECHNOLOGIES or generate 43.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| ASPEN TECHINC DL |
| SOFI TECHNOLOGIES |
ASPEN TECHINC and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and SOFI TECHNOLOGIES
The main advantage of trading using opposite ASPEN TECHINC and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC position performs unexpectedly, SOFI 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| ASPEN TECHINC vs. Superior Plus Corp | ASPEN TECHINC vs. NMI Holdings | ASPEN TECHINC vs. Origin Agritech | ASPEN TECHINC vs. SIVERS SEMICONDUCTORS AB |
| SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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