Correlation Between TRAVEL + and SOFI TECHNOLOGIES

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and SOFI TECHNOLOGIES.

Diversification Opportunities for TRAVEL + and SOFI TECHNOLOGIES

0.89

Correlation Coefficient

TRAVEL +  SOFI TECHNOLOGIES

Very poor diversification

The 3 months correlation between TRAVEL and SOFI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between TRAVEL + and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon TRAVEL + is expected to generate 2.0 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 1.77 times less risky than SOFI TECHNOLOGIES. It trades about 0.28 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  979.00  in SOFI TECHNOLOGIES on April 21, 2025 and sell it today you would earn a total of  879.00  from holding SOFI TECHNOLOGIES or generate 89.79% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  SOFI TECHNOLOGIES

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 24 (%) 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 TRAVEL + and SOFI TECHNOLOGIES

The main advantage of trading using opposite TRAVEL + and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.