Correlation Between SoundHound and Dave Warrants

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

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

Diversification Opportunities for SoundHound and Dave Warrants

-0.02

Correlation Coefficient

SoundHound  Dave Warrants

Good diversification

The 3 months correlation between SoundHound and Dave is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Dave Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Warrants 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 Dave Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Warrants has no effect on the direction of SoundHound i.e., SoundHound and Dave Warrants go up and down completely randomly.

Pair Corralation between SoundHound and Dave Warrants

Assuming the 90 days horizon SoundHound AI is expected to under-perform the Dave Warrants. But the stock apears to be less risky and, when comparing its historical volatility, SoundHound AI is 1.02 times less risky than Dave Warrants. The stock trades about -0.17 of its potential returns per unit of risk. The Dave Warrants is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Dave Warrants on December 29, 2024 and sell it today you would lose (6.00) from holding Dave Warrants or give up 24.0% of portfolio value over 90 days.

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

SoundHound AI  vs.  Dave Warrants

SoundHound AI

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoundHound AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Dave Warrants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dave Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Dave Warrants is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SoundHound and Dave Warrants

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

The idea behind SoundHound AI and Dave Warrants 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.