Correlation Between SOFI TECHNOLOGIES and Computershare

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

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

Diversification Opportunities for SOFI TECHNOLOGIES and Computershare

-0.26

Correlation Coefficient

SOFI TECHNOLOGIES  Computershare

Very good diversification

The 3 months correlation between SOFI and Computershare is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Computershare go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and Computershare

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to under-perform the Computershare. In addition to that, SOFI TECHNOLOGIES is 1.46 times more volatile than Computershare Limited. It trades about -0.02 of its total potential returns per unit of risk. Computershare Limited is currently generating about 0.16 per unit of volatility. If you would invest  1,949  in Computershare Limited on December 2, 2024 and sell it today you would earn a total of  491.00  from holding Computershare Limited or generate 25.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SOFI TECHNOLOGIES  vs.  Computershare Limited

SOFI TECHNOLOGIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOFI TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOFI TECHNOLOGIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Computershare Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Computershare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOFI TECHNOLOGIES and Computershare

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

The idea behind SOFI TECHNOLOGIES and Computershare Limited 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.