Correlation Between Retail Estates and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for Retail Estates and SOFI TECHNOLOGIES

-0.57

Correlation Coefficient

Retail Estates  SOFI TECHNOLOGIES

Excellent diversification

The 3 months correlation between Retail and SOFI is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Retail Estates and SOFI TECHNOLOGIES

Assuming the 90 days horizon Retail Estates NV is expected to generate 0.27 times more return on investment than SOFI TECHNOLOGIES. However, Retail Estates NV is 3.7 times less risky than SOFI TECHNOLOGIES. It trades about 0.02 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about -0.05 per unit of risk. If you would invest  5,880  in Retail Estates NV on December 26, 2024 and sell it today you would earn a total of  40.00  from holding Retail Estates NV or generate 0.68% return on investment over 90 days.

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

Retail Estates NV  vs.  SOFI TECHNOLOGIES

Retail Estates NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Retail Estates is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Retail Estates and SOFI TECHNOLOGIES

The main advantage of trading using opposite Retail Estates and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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 Retail Estates NV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.