Correlation Between SoFi Technologies and Mastercard

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

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

Diversification Opportunities for SoFi Technologies and Mastercard

0.86

Correlation Coefficient

SoFi Technologies  Mastercard

Very poor diversification

The 3 months correlation between SoFi and Mastercard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Mastercard go up and down completely randomly.

Pair Corralation between SoFi Technologies and Mastercard

Given the investment horizon of 90 days SoFi Technologies is expected to under-perform the Mastercard. In addition to that, SoFi Technologies is 2.7 times more volatile than Mastercard. It trades about -0.03 of its total potential returns per unit of risk. Mastercard is currently generating about 0.0 per unit of volatility. If you would invest  56,306  in Mastercard on February 3, 2025 and sell it today you would lose (367.00) from holding Mastercard or give up 0.65% of portfolio value over 90 days.

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

SoFi Technologies  vs.  Mastercard

SoFi Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoFi Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Mastercard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoFi Technologies and Mastercard

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

The idea behind SoFi Technologies and Mastercard 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.