Correlation Between IShares Core and SoFi Social

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

By analyzing existing cross correlation between iShares Core SP and SoFi Social 50, you can compare the effects of market volatilities on IShares Core and SoFi Social 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 IShares Core with a short position of SoFi Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SoFi Social.

Diversification Opportunities for IShares Core and SoFi Social

0.88

Correlation Coefficient

IShares Core  SoFi Social

Very poor diversification

The 3 months correlation between IShares and SoFi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and SoFi Social 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Social 50 and IShares Core 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 iShares Core SP are associated (or correlated) with SoFi Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Social 50 has no effect on the direction of IShares Core i.e., IShares Core and SoFi Social go up and down completely randomly.

Pair Corralation between IShares Core and SoFi Social

Given the investment horizon of 90 days iShares Core SP is expected to generate 0.76 times more return on investment than SoFi Social. However, iShares Core SP is 1.31 times less risky than SoFi Social. It trades about -0.1 of its potential returns per unit of risk. SoFi Social 50 is currently generating about -0.1 per unit of risk. If you would invest  13,948  in iShares Core SP on December 19, 2024 and sell it today you would lose (1,138) from holding iShares Core SP or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

iShares Core SP  vs.  SoFi Social 50

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

SoFi Social 50

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoFi Social 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with IShares Core and SoFi Social

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

The idea behind iShares Core SP and SoFi Social 50 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.