Correlation Between Dave Busters and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for Dave Busters and SOFI TECHNOLOGIES

0.74

Correlation Coefficient

Dave Busters  SOFI TECHNOLOGIES

Poor diversification

The 3 months correlation between Dave and SOFI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Dave Busters and SOFI TECHNOLOGIES

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 1.03 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.13 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,517  in SOFI TECHNOLOGIES on December 27, 2024 and sell it today you would lose (255.00) from holding SOFI TECHNOLOGIES or give up 16.81% of portfolio value over 90 days.

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

Dave Busters Entertainment  vs.  SOFI TECHNOLOGIES

Dave Busters Enterta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dave Busters and SOFI TECHNOLOGIES

The main advantage of trading using opposite Dave Busters and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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.

The idea behind Dave Busters Entertainment and SOFI TECHNOLOGIES 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..