Correlation Between SoFi Technologies and OFX Group

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

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

Diversification Opportunities for SoFi Technologies and OFX Group

0.79

Correlation Coefficient

SoFi Technologies  OFX Group

Poor diversification

The 3 months correlation between SoFi and OFX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and OFX Group go up and down completely randomly.

Pair Corralation between SoFi Technologies and OFX Group

If you would invest  1,047  in SoFi Technologies on August 30, 2024 and sell it today you would earn a total of  502.00  from holding SoFi Technologies or generate 47.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

SoFi Technologies  vs.  OFX Group Ltd

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 fairly uncertain technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

OFX Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SoFi Technologies and OFX Group

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

The idea behind SoFi Technologies and OFX Group Ltd 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.