Correlation Between SOFI TECHNOLOGIES and CVW CLEANTECH
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and CVW CLEANTECH 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 CVW CLEANTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and CVW CLEANTECH INC, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and CVW CLEANTECH 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 CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and CVW CLEANTECH.
Diversification Opportunities for SOFI TECHNOLOGIES and CVW CLEANTECH
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOFI and CVW is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC 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 CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and CVW CLEANTECH go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and CVW CLEANTECH
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to under-perform the CVW CLEANTECH. In addition to that, SOFI TECHNOLOGIES is 1.16 times more volatile than CVW CLEANTECH INC. It trades about -0.05 of its total potential returns per unit of risk. CVW CLEANTECH INC is currently generating about -0.01 per unit of volatility. If you would invest 55.00 in CVW CLEANTECH INC on December 27, 2024 and sell it today you would lose (3.00) from holding CVW CLEANTECH INC or give up 5.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SOFI TECHNOLOGIES vs. CVW CLEANTECH INC
Performance |
Timeline |
SOFI TECHNOLOGIES |
CVW CLEANTECH INC |
SOFI TECHNOLOGIES and CVW CLEANTECH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SOFI TECHNOLOGIES and CVW CLEANTECH
The main advantage of trading using opposite SOFI TECHNOLOGIES and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, CVW CLEANTECH 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 CVW CLEANTECH will offset losses from the drop in CVW CLEANTECH's long position.SOFI TECHNOLOGIES vs. PKSHA TECHNOLOGY INC | SOFI TECHNOLOGIES vs. Alfa Financial Software | SOFI TECHNOLOGIES vs. Wayside Technology Group | SOFI TECHNOLOGIES vs. SPARTAN STORES |
CVW CLEANTECH vs. Monument Mining Limited | CVW CLEANTECH vs. The Yokohama Rubber | CVW CLEANTECH vs. THRACE PLASTICS | CVW CLEANTECH vs. GEAR4MUSIC LS 10 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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