Correlation Between ECGI Holdings and Sonic Foundry
Can any of the company-specific risk be diversified away by investing in both ECGI Holdings and Sonic Foundry 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 ECGI Holdings and Sonic Foundry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECGI Holdings and Sonic Foundry, you can compare the effects of market volatilities on ECGI Holdings and Sonic Foundry 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 ECGI Holdings with a short position of Sonic Foundry. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECGI Holdings and Sonic Foundry.
Diversification Opportunities for ECGI Holdings and Sonic Foundry
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECGI and Sonic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ECGI Holdings and Sonic Foundry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Foundry and ECGI Holdings 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 ECGI Holdings are associated (or correlated) with Sonic Foundry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Foundry has no effect on the direction of ECGI Holdings i.e., ECGI Holdings and Sonic Foundry go up and down completely randomly.
Pair Corralation between ECGI Holdings and Sonic Foundry
If you would invest 0.22 in ECGI Holdings on August 28, 2024 and sell it today you would lose (0.01) from holding ECGI Holdings or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
ECGI Holdings vs. Sonic Foundry
Performance |
| Timeline |
| ECGI Holdings |
| Sonic Foundry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ECGI Holdings and Sonic Foundry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECGI Holdings and Sonic Foundry
The main advantage of trading using opposite ECGI Holdings and Sonic Foundry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECGI Holdings position performs unexpectedly, Sonic Foundry 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 Sonic Foundry will offset losses from the drop in Sonic Foundry's long position.The idea behind ECGI Holdings and Sonic Foundry 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.| Sonic Foundry vs. 01 Communique Laboratory | Sonic Foundry vs. LifeSpeak | Sonic Foundry vs. RESAAS Services | Sonic Foundry vs. RenoWorks Software |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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