Correlation Between Sonic Foundry and SpringBig Holdings

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

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

Diversification Opportunities for Sonic Foundry and SpringBig Holdings

-0.14

Correlation Coefficient

Sonic Foundry  SpringBig Holdings

Good diversification

The 3 months correlation between Sonic and SpringBig is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Foundry and SpringBig Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringBig Holdings and Sonic Foundry 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 Sonic Foundry are associated (or correlated) with SpringBig Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringBig Holdings has no effect on the direction of Sonic Foundry i.e., Sonic Foundry and SpringBig Holdings go up and down completely randomly.

Pair Corralation between Sonic Foundry and SpringBig Holdings

Given the investment horizon of 90 days Sonic Foundry is expected to generate 0.49 times more return on investment than SpringBig Holdings. However, Sonic Foundry is 2.02 times less risky than SpringBig Holdings. It trades about 0.01 of its potential returns per unit of risk. SpringBig Holdings is currently generating about -0.03 per unit of risk. If you would invest  90.00  in Sonic Foundry on October 5, 2024 and sell it today you would lose (8.00) from holding Sonic Foundry or give up 8.89% of portfolio value over 90 days.

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

Sonic Foundry  vs.  SpringBig Holdings

Sonic Foundry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonic Foundry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sonic Foundry is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SpringBig Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpringBig Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, SpringBig Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sonic Foundry and SpringBig Holdings

The main advantage of trading using opposite Sonic Foundry and SpringBig Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Foundry position performs unexpectedly, SpringBig 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 SpringBig Holdings will offset losses from the drop in SpringBig Holdings' long position.

The idea behind Sonic Foundry and SpringBig Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.