Correlation Between SoFi Technologies and Johnson Outdoors

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

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

Diversification Opportunities for SoFi Technologies and Johnson Outdoors

0.31

Correlation Coefficient

SoFi Technologies  Johnson Outdoors

Weak diversification

The 3 months correlation between SoFi and Johnson is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Johnson Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Outdoors 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 Johnson Outdoors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Outdoors has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Johnson Outdoors go up and down completely randomly.

Pair Corralation between SoFi Technologies and Johnson Outdoors

Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.94 times more return on investment than Johnson Outdoors. However, SoFi Technologies is 1.94 times more volatile than Johnson Outdoors. It trades about 0.02 of its potential returns per unit of risk. Johnson Outdoors is currently generating about -0.04 per unit of risk. If you would invest  726.00  in SoFi Technologies on January 19, 2024 and sell it today you would earn a total of  5.72  from holding SoFi Technologies or generate 0.79% return on investment over 90 days.

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

SoFi Technologies  vs.  Johnson Outdoors

SoFi Technologies

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, SoFi Technologies is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Outdoors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SoFi Technologies and Johnson Outdoors

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

The idea behind SoFi Technologies and Johnson Outdoors 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.