Correlation Between Sonos and Sony Corp

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

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

Diversification Opportunities for Sonos and Sony Corp

-0.13

Correlation Coefficient

Sonos  Sony Corp

Good diversification

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

Pair Corralation between Sonos and Sony Corp

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Sony Corp. In addition to that, Sonos is 1.47 times more volatile than Sony Corp. It trades about -0.34 of its total potential returns per unit of risk. Sony Corp is currently generating about -0.02 per unit of volatility. If you would invest  8,489  in Sony Corp on February 3, 2024 and sell it today you would lose (55.00) from holding Sony Corp or give up 0.65% of portfolio value over 90 days.

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

Sonos Inc  vs.  Sony Corp

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 conflicting basic indicators, Sonos may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 conflicting 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.

Pair Trading with Sonos and Sony Corp

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

The idea behind Sonos Inc and Sony Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.