Correlation Between SoFi Technologies and Guggenheim Municipal
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Guggenheim Municipal 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 Guggenheim Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Guggenheim Municipal Income, you can compare the effects of market volatilities on SoFi Technologies and Guggenheim Municipal 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 Guggenheim Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Guggenheim Municipal.
Diversification Opportunities for SoFi Technologies and Guggenheim Municipal
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between SoFi and Guggenheim is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Guggenheim Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Municipal 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 Guggenheim Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Municipal has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Guggenheim Municipal go up and down completely randomly.
Pair Corralation between SoFi Technologies and Guggenheim Municipal
Given the investment horizon of 90 days SoFi Technologies is expected to generate 11.61 times more return on investment than Guggenheim Municipal. However, SoFi Technologies is 11.61 times more volatile than Guggenheim Municipal Income. It trades about 0.03 of its potential returns per unit of risk. Guggenheim Municipal Income is currently generating about -0.22 per unit of risk. If you would invest 708.00 in SoFi Technologies on January 18, 2024 and sell it today you would earn a total of 8.00 from holding SoFi Technologies or generate 1.13% 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. Guggenheim Municipal Income
Performance |
Timeline |
SoFi Technologies |
Guggenheim Municipal |
SoFi Technologies and Guggenheim Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoFi Technologies and Guggenheim Municipal
The main advantage of trading using opposite SoFi Technologies and Guggenheim Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Guggenheim Municipal 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 Guggenheim Municipal will offset losses from the drop in Guggenheim Municipal's long position.SoFi Technologies vs. Upstart HoldingsInc | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir TechnologiesInc |
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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