Correlation Between Lion Biotechnologies and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and SOFI TECHNOLOGIES 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 Lion Biotechnologies and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on Lion Biotechnologies and SOFI TECHNOLOGIES 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 Lion Biotechnologies with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and SOFI TECHNOLOGIES.
Diversification Opportunities for Lion Biotechnologies and SOFI TECHNOLOGIES
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and SOFI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and SOFI TECHNOLOGIES
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the SOFI TECHNOLOGIES. In addition to that, Lion Biotechnologies is 1.09 times more volatile than SOFI TECHNOLOGIES. It trades about -0.07 of its total potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.32 per unit of volatility. If you would invest 712.00 in SOFI TECHNOLOGIES on September 23, 2024 and sell it today you would earn a total of 769.00 from holding SOFI TECHNOLOGIES or generate 108.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lion Biotechnologies vs. SOFI TECHNOLOGIES
Performance |
Timeline |
Lion Biotechnologies |
SOFI TECHNOLOGIES |
Lion Biotechnologies and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lion Biotechnologies and SOFI TECHNOLOGIES
The main advantage of trading using opposite Lion Biotechnologies and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.Lion Biotechnologies vs. National Retail Properties | Lion Biotechnologies vs. SHIP HEALTHCARE HLDGINC | Lion Biotechnologies vs. BJs Wholesale Club | Lion Biotechnologies vs. Natural Health Trends |
SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc | SOFI TECHNOLOGIES vs. Apple Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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