Correlation Between Embrace Change and SoFi Technologies

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

By analyzing existing cross correlation between Embrace Change Acquisition and SoFi Technologies, you can compare the effects of market volatilities on Embrace Change 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 Embrace Change with a short position of SoFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and SoFi Technologies.

Diversification Opportunities for Embrace Change and SoFi Technologies

-0.47

Correlation Coefficient

Embrace Change  SoFi Technologies

Very good diversification

The 3 months correlation between Embrace and SoFi is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and SoFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Technologies and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and SoFi Technologies go up and down completely randomly.

Pair Corralation between Embrace Change and SoFi Technologies

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 0.09 times more return on investment than SoFi Technologies. However, Embrace Change Acquisition is 11.5 times less risky than SoFi Technologies. It trades about 0.15 of its potential returns per unit of risk. SoFi Technologies is currently generating about -0.08 per unit of risk. If you would invest  1,170  in Embrace Change Acquisition on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Embrace Change Acquisition or generate 3.5% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  SoFi Technologies

Embrace Change Acqui

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Embrace Change and SoFi Technologies

The main advantage of trading using opposite Embrace Change and SoFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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' long position.

The idea behind Embrace Change Acquisition 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.