Correlation Between Berry Petroleum and SoFi Select

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

By analyzing existing cross correlation between Berry Petroleum Corp and SoFi Select 500, you can compare the effects of market volatilities on Berry Petroleum and SoFi Select 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 Berry Petroleum with a short position of SoFi Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berry Petroleum and SoFi Select.

Diversification Opportunities for Berry Petroleum and SoFi Select

0.62

Correlation Coefficient

Berry Petroleum  SoFi Select

Poor diversification

The 3 months correlation between Berry and SoFi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Berry Petroleum Corp and SoFi Select 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Select 500 and Berry Petroleum 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 Berry Petroleum Corp are associated (or correlated) with SoFi Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Select 500 has no effect on the direction of Berry Petroleum i.e., Berry Petroleum and SoFi Select go up and down completely randomly.

Pair Corralation between Berry Petroleum and SoFi Select

Considering the 90-day investment horizon Berry Petroleum Corp is expected to under-perform the SoFi Select. In addition to that, Berry Petroleum is 2.27 times more volatile than SoFi Select 500. It trades about -0.09 of its total potential returns per unit of risk. SoFi Select 500 is currently generating about -0.08 per unit of volatility. If you would invest  11,163  in SoFi Select 500 on December 17, 2024 and sell it today you would lose (752.00) from holding SoFi Select 500 or give up 6.74% of portfolio value over 90 days.

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

Berry Petroleum Corp  vs.  SoFi Select 500

Berry Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Berry Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SoFi Select 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoFi Select 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Berry Petroleum and SoFi Select

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

The idea behind Berry Petroleum Corp and SoFi Select 500 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.