Correlation Between SoFi Technologies and Joann
Can any of the company-specific risk be diversified away by investing in both SoFi Technologies and Joann 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 Joann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Technologies and Joann Inc, you can compare the effects of market volatilities on SoFi Technologies and Joann 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 Joann. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Technologies and Joann.
Diversification Opportunities for SoFi Technologies and Joann
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoFi and Joann is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Joann Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joann Inc 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 Joann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joann Inc has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Joann go up and down completely randomly.
Pair Corralation between SoFi Technologies and Joann
Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.32 times less return on investment than Joann. But when comparing it to its historical volatility, SoFi Technologies is 5.18 times less risky than Joann. It trades about 0.11 of its potential returns per unit of risk. Joann Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Joann Inc on January 26, 2024 and sell it today you would lose (1.05) from holding Joann Inc or give up 9.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
SoFi Technologies vs. Joann Inc
Performance |
Timeline |
SoFi Technologies |
Joann Inc |
SoFi Technologies and Joann Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoFi Technologies and Joann
The main advantage of trading using opposite SoFi Technologies and Joann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Technologies position performs unexpectedly, Joann 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 Joann will offset losses from the drop in Joann's long position.SoFi Technologies vs. Upstart HoldingsInc | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir TechnologiesInc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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