Correlation Between SoFi Technologies and Rotork Plc

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

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

Diversification Opportunities for SoFi Technologies and Rotork Plc

-0.17

Correlation Coefficient

SoFi Technologies  Rotork Plc

Good diversification

The 3 months correlation between SoFi and Rotork is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Rotork plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rotork plc 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 Rotork Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rotork plc has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Rotork Plc go up and down completely randomly.

Pair Corralation between SoFi Technologies and Rotork Plc

Given the investment horizon of 90 days SoFi Technologies is expected to under-perform the Rotork Plc. In addition to that, SoFi Technologies is 1.01 times more volatile than Rotork plc. It trades about -0.07 of its total potential returns per unit of risk. Rotork plc is currently generating about -0.01 per unit of volatility. If you would invest  435.00  in Rotork plc on December 28, 2024 and sell it today you would lose (29.00) from holding Rotork plc or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

SoFi Technologies  vs.  Rotork plc

SoFi Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoFi Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Rotork plc

Risk-Adjusted Performance

Insignificant

Over the last 90 days Rotork plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rotork Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SoFi Technologies and Rotork Plc

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

The idea behind SoFi Technologies and Rotork plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.