Correlation Between Sony Corp and Sonos

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

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

Diversification Opportunities for Sony Corp and Sonos

-0.13

Correlation Coefficient

Sony Corp  Sonos

Good diversification

The 3 months correlation between Sony and Sonos is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Sony Corp 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 Sony Corp are associated (or correlated) with Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Sony Corp i.e., Sony Corp and Sonos go up and down completely randomly.

Pair Corralation between Sony Corp and Sonos

Assuming the 90 days horizon Sony Corp is expected to generate 0.77 times more return on investment than Sonos. However, Sony Corp is 1.29 times less risky than Sonos. It trades about 0.08 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.31 per unit of risk. If you would invest  8,489  in Sony Corp on February 3, 2024 and sell it today you would earn a total of  176.00  from holding Sony Corp or generate 2.07% return on investment over 90 days.

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

Sony Corp  vs.  Sonos Inc

Sony Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sonos Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sonos may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sony Corp and Sonos

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

The idea behind Sony Corp and Sonos 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.