Correlation Between SoundHound and LYFT
Can any of the company-specific risk be diversified away by investing in both SoundHound and LYFT 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 LYFT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and LYFT Inc, you can compare the effects of market volatilities on SoundHound and LYFT 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 LYFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and LYFT.
Diversification Opportunities for SoundHound and LYFT
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SoundHound and LYFT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and LYFT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYFT Inc 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 LYFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYFT Inc has no effect on the direction of SoundHound i.e., SoundHound and LYFT go up and down completely randomly.
Pair Corralation between SoundHound and LYFT
Given the investment horizon of 90 days SoundHound AI is expected to generate 1.57 times more return on investment than LYFT. However, SoundHound is 1.57 times more volatile than LYFT Inc. It trades about 0.11 of its potential returns per unit of risk. LYFT Inc is currently generating about 0.04 per unit of risk. If you would invest 493.00 in SoundHound AI on September 2, 2024 and sell it today you would earn a total of 438.00 from holding SoundHound AI or generate 88.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoundHound AI vs. LYFT Inc
Performance |
| Timeline |
| SoundHound AI |
| LYFT Inc |
SoundHound and LYFT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoundHound and LYFT
The main advantage of trading using opposite SoundHound and LYFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, LYFT 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 LYFT will offset losses from the drop in LYFT's long position.| SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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