Correlation Between SoundHound and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both SoundHound and Fairfax Financial 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 SoundHound and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and Fairfax Financial Holdings, you can compare the effects of market volatilities on SoundHound and Fairfax Financial 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 SoundHound with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and Fairfax Financial.
Diversification Opportunities for SoundHound and Fairfax Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SoundHound and Fairfax is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and SoundHound 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 SoundHound AI are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of SoundHound i.e., SoundHound and Fairfax Financial go up and down completely randomly.
Pair Corralation between SoundHound and Fairfax Financial
Given the investment horizon of 90 days SoundHound AI is expected to generate 53.2 times more return on investment than Fairfax Financial. However, SoundHound is 53.2 times more volatile than Fairfax Financial Holdings. It trades about 0.31 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.22 per unit of risk. If you would invest 756.00 in SoundHound AI on September 13, 2024 and sell it today you would earn a total of 611.00 from holding SoundHound AI or generate 80.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SoundHound AI vs. Fairfax Financial Holdings
Performance |
| Timeline |
| SoundHound AI |
| Fairfax Financial |
SoundHound and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoundHound and Fairfax Financial
The main advantage of trading using opposite SoundHound and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
| Fairfax Financial vs. Root Inc | Fairfax Financial vs. Bank of America | Fairfax Financial vs. Aerovate Therapeutics | Fairfax Financial vs. SoundHound AI |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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