Correlation Between SoFi Technologies and Paysafe

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

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

Diversification Opportunities for SoFi Technologies and Paysafe

-0.51

Correlation Coefficient

SoFi Technologies  Paysafe

Excellent diversification

The 3 months correlation between SoFi and Paysafe is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Paysafe go up and down completely randomly.

Pair Corralation between SoFi Technologies and Paysafe

Given the investment horizon of 90 days SoFi Technologies is expected to generate 0.8 times more return on investment than Paysafe. However, SoFi Technologies is 1.25 times less risky than Paysafe. It trades about 0.4 of its potential returns per unit of risk. Paysafe is currently generating about -0.01 per unit of risk. If you would invest  753.00  in SoFi Technologies on September 3, 2024 and sell it today you would earn a total of  888.00  from holding SoFi Technologies or generate 117.93% return on investment over 90 days.

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

SoFi Technologies  vs.  Paysafe

SoFi Technologies

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Paysafe is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SoFi Technologies and Paysafe

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

The idea behind SoFi Technologies and Paysafe 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.