Correlation Between Wayside Technology and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for Wayside Technology and SOFI TECHNOLOGIES

0.97

Correlation Coefficient

Wayside Technology  SOFI TECHNOLOGIES

Almost no diversification

The 3 months correlation between Wayside and SOFI is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Wayside Technology and SOFI TECHNOLOGIES

Assuming the 90 days horizon Wayside Technology Group is expected to generate 0.78 times more return on investment than SOFI TECHNOLOGIES. However, Wayside Technology Group is 1.28 times less risky than SOFI TECHNOLOGIES. It trades about 0.13 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.07 per unit of risk. If you would invest  3,869  in Wayside Technology Group on September 28, 2024 and sell it today you would earn a total of  8,031  from holding Wayside Technology Group or generate 207.57% return on investment over 90 days.

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

Wayside Technology Group  vs.  SOFI TECHNOLOGIES

Wayside Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 26 (%) 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 Wayside Technology and SOFI TECHNOLOGIES

The main advantage of trading using opposite Wayside Technology and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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 Wayside Technology Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.