Correlation Between SoFi Technologies and OMV AG

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

By analyzing existing cross correlation between SoFi Technologies and OMV AG PK, you can compare the effects of market volatilities on SoFi Technologies and OMV AG 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 OMV AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and OMV AG.

Diversification Opportunities for SoFi Technologies and OMV AG

-0.66

Correlation Coefficient

SoFi Technologies  OMV AG

Excellent diversification

The 3 months correlation between SoFi and OMV is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and OMV AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV AG PK 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 OMV AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV AG PK has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and OMV AG go up and down completely randomly.

Pair Corralation between SoFi Technologies and OMV AG

Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.47 times less return on investment than OMV AG. But when comparing it to its historical volatility, SoFi Technologies is 3.91 times less risky than OMV AG. It trades about 0.09 of its potential returns per unit of risk. OMV AG PK is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,112  in OMV AG PK on September 14, 2024 and sell it today you would lose (115.00) from holding OMV AG PK or give up 10.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

SoFi Technologies  vs.  OMV AG PK

SoFi Technologies

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

OMV AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OMV AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, OMV AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoFi Technologies and OMV AG

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

The idea behind SoFi Technologies and OMV AG PK 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .