Correlation Between Kodiak Gas and Sonos
Can any of the company-specific risk be diversified away by investing in both Kodiak Gas 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 Kodiak Gas and Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kodiak Gas Services, and Sonos Inc, you can compare the effects of market volatilities on Kodiak Gas 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 Kodiak Gas with a short position of Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Gas and Sonos.
Diversification Opportunities for Kodiak Gas and Sonos
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kodiak and Sonos is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Kodiak Gas 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 Kodiak Gas Services, 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 Kodiak Gas i.e., Kodiak Gas and Sonos go up and down completely randomly.
Pair Corralation between Kodiak Gas and Sonos
Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 0.84 times more return on investment than Sonos. However, Kodiak Gas Services, is 1.2 times less risky than Sonos. It trades about 0.17 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.01 per unit of risk. If you would invest 1,734 in Kodiak Gas Services, on September 3, 2024 and sell it today you would earn a total of 2,282 from holding Kodiak Gas Services, or generate 131.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kodiak Gas Services, vs. Sonos Inc
Performance |
| Timeline |
| Kodiak Gas Services, |
| Sonos Inc |
Kodiak Gas and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kodiak Gas and Sonos
The main advantage of trading using opposite Kodiak Gas and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Gas 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.| Kodiak Gas vs. Shake Shack | Kodiak Gas vs. United Airlines Holdings | Kodiak Gas vs. Ultra Clean Holdings | Kodiak Gas vs. Starbucks |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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