Correlation Between SILICON LABORATOR and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for SILICON LABORATOR and SOFI TECHNOLOGIES

0.46

Correlation Coefficient

SILICON LABORATOR  SOFI TECHNOLOGIES

Very weak diversification

The 3 months correlation between SILICON and SOFI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR i.e., SILICON LABORATOR and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 2.31 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, SILICON LABORATOR is 1.27 times less risky than SOFI TECHNOLOGIES. It trades about 0.14 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  949.00  in SOFI TECHNOLOGIES on October 22, 2024 and sell it today you would earn a total of  651.00  from holding SOFI TECHNOLOGIES or generate 68.6% return on investment over 90 days.

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

SILICON LABORATOR  vs.  SOFI TECHNOLOGIES

SILICON LABORATOR

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SILICON LABORATOR and SOFI TECHNOLOGIES

The main advantage of trading using opposite SILICON LABORATOR and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILICON LABORATOR 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 SILICON LABORATOR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.