Correlation Between SOFI TECHNOLOGIES and Stockland

Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Stockland 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 Stockland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOFI TECHNOLOGIES and Stockland, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Stockland 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 Stockland. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Stockland.

Diversification Opportunities for SOFI TECHNOLOGIES and Stockland

-0.56

Correlation Coefficient

SOFI TECHNOLOGIES  Stockland

Excellent diversification

The 3 months correlation between SOFI and Stockland is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland 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 Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Stockland go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and Stockland

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.83 times more return on investment than Stockland. However, SOFI TECHNOLOGIES is 1.83 times more volatile than Stockland. It trades about 0.29 of its potential returns per unit of risk. Stockland is currently generating about -0.05 per unit of risk. If you would invest  756.00  in SOFI TECHNOLOGIES on October 8, 2024 and sell it today you would earn a total of  647.00  from holding SOFI TECHNOLOGIES or generate 85.58% 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.  Stockland

SOFI TECHNOLOGIES

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SOFI TECHNOLOGIES and Stockland

The main advantage of trading using opposite SOFI TECHNOLOGIES and Stockland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, Stockland 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 Stockland will offset losses from the drop in Stockland's long position.

The idea behind SOFI TECHNOLOGIES and Stockland pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.