Correlation Between SoundHound and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both SoundHound and PayPal Holdings 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 PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and PayPal Holdings, you can compare the effects of market volatilities on SoundHound and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and PayPal Holdings.
Diversification Opportunities for SoundHound and PayPal Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoundHound and PayPal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of SoundHound i.e., SoundHound and PayPal Holdings go up and down completely randomly.
Pair Corralation between SoundHound and PayPal Holdings
Given the investment horizon of 90 days SoundHound AI is expected to generate 6.94 times more return on investment than PayPal Holdings. However, SoundHound is 6.94 times more volatile than PayPal Holdings. It trades about 0.31 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.15 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoundHound AI vs. PayPal Holdings
Performance |
| Timeline |
| SoundHound AI |
| PayPal Holdings |
SoundHound and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoundHound and PayPal Holdings
The main advantage of trading using opposite SoundHound and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. American Express |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |