Correlation Between SoundHound and Churchill

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

By analyzing existing cross correlation between SoundHound AI and Churchill Downs 55, you can compare the effects of market volatilities on SoundHound and Churchill 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 Churchill. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and Churchill.

Diversification Opportunities for SoundHound and Churchill

-0.67

Correlation Coefficient

SoundHound  Churchill

Excellent diversification

The 3 months correlation between SoundHound and Churchill is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Churchill Downs 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs 55 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 Churchill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs 55 has no effect on the direction of SoundHound i.e., SoundHound and Churchill go up and down completely randomly.

Pair Corralation between SoundHound and Churchill

Given the investment horizon of 90 days SoundHound AI is expected to generate 16.92 times more return on investment than Churchill. However, SoundHound is 16.92 times more volatile than Churchill Downs 55. It trades about 0.25 of its potential returns per unit of risk. Churchill Downs 55 is currently generating about -0.13 per unit of risk. If you would invest  485.00  in SoundHound AI on September 13, 2024 and sell it today you would earn a total of  882.00  from holding SoundHound AI or generate 181.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

SoundHound AI  vs.  Churchill Downs 55

SoundHound AI

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 19 (%) 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.

Churchill Downs 55

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Churchill Downs 55 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Churchill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoundHound and Churchill

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

The idea behind SoundHound AI and Churchill Downs 55 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.