Correlation Between SoFi Technologies and Sekisui House

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

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

Diversification Opportunities for SoFi Technologies and Sekisui House

-0.83

Correlation Coefficient

SoFi Technologies  Sekisui House

Pay attention - limited upside

The 3 months correlation between SoFi and Sekisui is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Sekisui House go up and down completely randomly.

Pair Corralation between SoFi Technologies and Sekisui House

Given the investment horizon of 90 days SoFi Technologies is expected to generate 1.05 times more return on investment than Sekisui House. However, SoFi Technologies is 1.05 times more volatile than Sekisui House. It trades about 0.37 of its potential returns per unit of risk. Sekisui House is currently generating about -0.07 per unit of risk. If you would invest  746.00  in SoFi Technologies on September 12, 2024 and sell it today you would earn a total of  783.00  from holding SoFi Technologies or generate 104.96% return on investment over 90 days.

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

SoFi Technologies  vs.  Sekisui House

SoFi Technologies

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SoFi Technologies and Sekisui House

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

The idea behind SoFi Technologies and Sekisui House 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.