Correlation Between SoFi Next and Schwab International

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

By analyzing existing cross correlation between SoFi Next 500 and Schwab International Dividend, you can compare the effects of market volatilities on SoFi Next and Schwab International 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 Next with a short position of Schwab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Next and Schwab International.

Diversification Opportunities for SoFi Next and Schwab International

-0.6

Correlation Coefficient

SoFi Next  Schwab International

Excellent diversification

The 3 months correlation between SoFi and Schwab is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Next 500 and Schwab International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International and SoFi Next 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 Next 500 are associated (or correlated) with Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of SoFi Next i.e., SoFi Next and Schwab International go up and down completely randomly.

Pair Corralation between SoFi Next and Schwab International

Given the investment horizon of 90 days SoFi Next 500 is expected to generate 1.77 times more return on investment than Schwab International. However, SoFi Next is 1.77 times more volatile than Schwab International Dividend. It trades about 0.15 of its potential returns per unit of risk. Schwab International Dividend is currently generating about -0.14 per unit of risk. If you would invest  1,404  in SoFi Next 500 on August 30, 2024 and sell it today you would earn a total of  164.00  from holding SoFi Next 500 or generate 11.68% return on investment over 90 days.

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

SoFi Next 500  vs.  Schwab International Dividend

SoFi Next 500

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Next 500 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SoFi Next may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Schwab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab International Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Schwab International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoFi Next and Schwab International

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

The idea behind SoFi Next 500 and Schwab International Dividend 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.