Correlation Between SoFi Technologies and Shell PLC

Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Shell 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 Shell 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 Shell PLC, you can compare the effects of market volatilities on SoFi Technologies and Shell 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 Shell PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Shell PLC.

Diversification Opportunities for SoFi Technologies and Shell PLC

-0.12

Correlation Coefficient

SoFi Technologies  Shell PLC

Good diversification

The 3 months correlation between SoFi and Shell is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Shell PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell 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 Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Shell PLC go up and down completely randomly.

Pair Corralation between SoFi Technologies and Shell PLC

Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.38 times more return on investment than Shell PLC. However, SoFi Technologies is 1.38 times more volatile than Shell PLC. It trades about 0.09 of its potential returns per unit of risk. Shell PLC is currently generating about 0.03 per unit of risk. If you would invest  768.00  in SoFi Technologies on December 4, 2024 and sell it today you would earn a total of  589.00  from holding SoFi Technologies or generate 76.69% return on investment over 90 days.

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

SoFi Technologies  vs.  Shell 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 uncertain 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.

Shell PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shell PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SoFi Technologies and Shell PLC

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

The idea behind SoFi Technologies and Shell 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.