Correlation Between Opendoor Technologies and SoFi Technologies

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

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

Diversification Opportunities for Opendoor Technologies and SoFi Technologies

0.5

Correlation Coefficient

Opendoor Technologies  SoFi Technologies

Very weak diversification

The 3 months correlation between Opendoor and SoFi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Opendoor Technologies and SoFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Technologies and Opendoor 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 Opendoor Technologies 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 Opendoor Technologies i.e., Opendoor Technologies and SoFi Technologies go up and down completely randomly.

Pair Corralation between Opendoor Technologies and SoFi Technologies

Given the investment horizon of 90 days Opendoor Technologies is expected to generate 2.59 times less return on investment than SoFi Technologies. In addition to that, Opendoor Technologies is 1.55 times more volatile than SoFi Technologies. It trades about 0.01 of its total potential returns per unit of risk. SoFi Technologies is currently generating about 0.03 per unit of volatility. If you would invest  572.00  in SoFi Technologies on March 11, 2024 and sell it today you would earn a total of  127.00  from holding SoFi Technologies or generate 22.2% return on investment over 90 days.

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

Opendoor Technologies  vs.  SoFi Technologies

Opendoor Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opendoor Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

SoFi Technologies

Risk-Adjusted Performance

0 of 100

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 conflicting 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.

Pair Trading with Opendoor Technologies and SoFi Technologies

The main advantage of trading using opposite Opendoor Technologies and SoFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opendoor Technologies 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' long position.

The idea behind Opendoor Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.