Correlation Between PICKN PAY and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for PICKN PAY and SOFI TECHNOLOGIES

0.24

Correlation Coefficient

PICKN PAY  SOFI TECHNOLOGIES

Modest diversification

The 3 months correlation between PICKN and SOFI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and PICKN PAY 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 PICKN PAY STORES 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 PICKN PAY i.e., PICKN PAY and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between PICKN PAY and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon PICKN PAY STORES is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, PICKN PAY STORES is 1.87 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.06 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,513  in SOFI TECHNOLOGIES on December 2, 2024 and sell it today you would lose (133.00) from holding SOFI TECHNOLOGIES or give up 8.79% of portfolio value over 90 days.

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

PICKN PAY STORES  vs.  SOFI TECHNOLOGIES

PICKN PAY STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days PICKN PAY STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm 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 nearly stable basic indicators, SOFI TECHNOLOGIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PICKN PAY and SOFI TECHNOLOGIES

The main advantage of trading using opposite PICKN PAY and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICKN PAY 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 PICKN PAY STORES 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 Global Correlations module to find global opportunities by holding instruments from different markets.