Correlation Between SoundHound and Rumble

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

By analyzing existing cross correlation between SoundHound AI and Rumble Inc, you can compare the effects of market volatilities on SoundHound and Rumble 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 Rumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and Rumble.

Diversification Opportunities for SoundHound and Rumble

0.85

Correlation Coefficient

SoundHound  Rumble

Very poor diversification

The 3 months correlation between SoundHound and Rumble is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of SoundHound i.e., SoundHound and Rumble go up and down completely randomly.

Pair Corralation between SoundHound and Rumble

Given the investment horizon of 90 days SoundHound AI is expected to under-perform the Rumble. But the stock apears to be less risky and, when comparing its historical volatility, SoundHound AI is 1.08 times less risky than Rumble. The stock trades about -0.22 of its potential returns per unit of risk. The Rumble Inc is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  627.00  in Rumble Inc on October 27, 2024 and sell it today you would lose (135.00) from holding Rumble Inc or give up 21.53% of portfolio value over 90 days.

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

SoundHound AI  vs.  Rumble Inc

SoundHound AI

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, SoundHound displayed solid returns over the last few months and may actually be approaching a breakup point.

Rumble Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rumble Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Rumble showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SoundHound and Rumble

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

The idea behind SoundHound AI and Rumble Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..