Correlation Between SOFI TECHNOLOGIES and Applied Materials

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

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

Diversification Opportunities for SOFI TECHNOLOGIES and Applied Materials

0.91

Correlation Coefficient

SOFI TECHNOLOGIES  Applied Materials

Almost no diversification

The 3 months correlation between SOFI and Applied is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and Applied Materials go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and Applied Materials

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 1.26 times more return on investment than Applied Materials. However, SOFI TECHNOLOGIES is 1.26 times more volatile than Applied Materials. It trades about 0.22 of its potential returns per unit of risk. Applied Materials is currently generating about 0.21 per unit of risk. If you would invest  1,040  in SOFI TECHNOLOGIES on April 9, 2025 and sell it today you would earn a total of  594.00  from holding SOFI TECHNOLOGIES or generate 57.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

SOFI TECHNOLOGIES  vs.  Applied Materials

SOFI TECHNOLOGIES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Applied Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOFI TECHNOLOGIES and Applied Materials

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

The idea behind SOFI TECHNOLOGIES and Applied Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.