Correlation Between SoFi Technologies and Regional Management

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

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

Diversification Opportunities for SoFi Technologies and Regional Management

0.67

Correlation Coefficient

SoFi Technologies  Regional Management

Poor diversification

The 3 months correlation between SoFi and Regional is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp 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 Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Regional Management go up and down completely randomly.

Pair Corralation between SoFi Technologies and Regional Management

Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.56 times more return on investment than Regional Management. However, SoFi Technologies is 1.56 times more volatile than Regional Management Corp. It trades about 0.15 of its potential returns per unit of risk. Regional Management Corp is currently generating about 0.18 per unit of risk. If you would invest  1,503  in SoFi Technologies on October 20, 2024 and sell it today you would earn a total of  147.00  from holding SoFi Technologies or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SoFi Technologies  vs.  Regional Management Corp

SoFi Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 18 (%) 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.

Regional Management Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Management Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Regional Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SoFi Technologies and Regional Management

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

The idea behind SoFi Technologies and Regional Management Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.