Correlation Between LION ONE and SOFI TECHNOLOGIES

Can any of the company-specific risk be diversified away by investing in both LION ONE 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 ONE 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 ONE METALS and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on LION ONE 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 ONE with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and SOFI TECHNOLOGIES.

Diversification Opportunities for LION ONE and SOFI TECHNOLOGIES

-0.73

Correlation Coefficient

LION ONE  SOFI TECHNOLOGIES

Pay attention - limited upside

The 3 months correlation between LION and SOFI is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and LION ONE 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 ONE METALS 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 ONE i.e., LION ONE and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between LION ONE and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the SOFI TECHNOLOGIES. In addition to that, LION ONE is 1.33 times more volatile than SOFI TECHNOLOGIES. It trades about -0.06 of its total potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.33 per unit of volatility. If you would invest  710.00  in SOFI TECHNOLOGIES on September 27, 2024 and sell it today you would earn a total of  761.00  from holding SOFI TECHNOLOGIES or generate 107.18% return on investment over 90 days.

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

LION ONE METALS  vs.  SOFI TECHNOLOGIES

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 26 (%) 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.

Pair Trading with LION ONE and SOFI TECHNOLOGIES

The main advantage of trading using opposite LION ONE and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.

The idea behind LION ONE METALS and SOFI TECHNOLOGIES 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 Transaction History module to view history of all your transactions and understand their impact on performance.