Correlation Between SoFi Technologies and Enbridge 6375

Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Enbridge 6375 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 SoFi Technologies and Enbridge 6375 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoFi Technologies and Enbridge 6375 Fixed, you can compare the effects of market volatilities on SoFi Technologies and Enbridge 6375 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 SoFi Technologies with a short position of Enbridge 6375. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Enbridge 6375.

Diversification Opportunities for SoFi Technologies and Enbridge 6375

0.92

Correlation Coefficient

SoFi Technologies  Enbridge 6375

Almost no diversification

The 3 months correlation between SoFi and Enbridge is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Enbridge 6375 Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 6375 Fixed and SoFi Technologies 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 SoFi Technologies are associated (or correlated) with Enbridge 6375. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge 6375 Fixed has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Enbridge 6375 go up and down completely randomly.

Pair Corralation between SoFi Technologies and Enbridge 6375

Given the investment horizon of 90 days SoFi Technologies is expected to generate 13.64 times more return on investment than Enbridge 6375. However, SoFi Technologies is 13.64 times more volatile than Enbridge 6375 Fixed. It trades about 0.09 of its potential returns per unit of risk. Enbridge 6375 Fixed is currently generating about 0.2 per unit of risk. If you would invest  461.00  in SoFi Technologies on September 20, 2024 and sell it today you would earn a total of  1,205  from holding SoFi Technologies or generate 261.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	14.75%
Values	Daily Returns

SoFi Technologies  vs.  Enbridge 6375 Fixed

SoFi Technologies

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Enbridge 6375 Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enbridge 6375 Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Enbridge 6375 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoFi Technologies and Enbridge 6375

The main advantage of trading using opposite SoFi Technologies and Enbridge 6375 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Enbridge 6375 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 Enbridge 6375 will offset losses from the drop in Enbridge 6375's long position.

The idea behind SoFi Technologies and Enbridge 6375 Fixed 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..