Correlation Between SOFI TECHNOLOGIES and Geberit AG

Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and Geberit AG 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 Geberit AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOFI TECHNOLOGIES and Geberit AG, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and Geberit AG 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 Geberit AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and Geberit AG.

Diversification Opportunities for SOFI TECHNOLOGIES and Geberit AG

-0.24

Correlation Coefficient

SOFI TECHNOLOGIES  Geberit AG

Very good diversification

The 3 months correlation between SOFI and Geberit is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Geberit AG go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and Geberit AG

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 2.04 times more return on investment than Geberit AG. However, SOFI TECHNOLOGIES is 2.04 times more volatile than Geberit AG. It trades about 0.07 of its potential returns per unit of risk. Geberit AG is currently generating about 0.04 per unit of risk. If you would invest  751.00  in SOFI TECHNOLOGIES on September 30, 2024 and sell it today you would earn a total of  766.00  from holding SOFI TECHNOLOGIES or generate 102.0% 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.  Geberit AG

SOFI TECHNOLOGIES

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Geberit AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geberit AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SOFI TECHNOLOGIES and Geberit AG

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

The idea behind SOFI TECHNOLOGIES and Geberit AG 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.