Correlation Between Playtika Holding and Sonos
Can any of the company-specific risk be diversified away by investing in both Playtika Holding 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 Playtika Holding and Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtika Holding Corp and Sonos Inc, you can compare the effects of market volatilities on Playtika Holding 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 Playtika Holding with a short position of Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtika Holding and Sonos.
Diversification Opportunities for Playtika Holding and Sonos
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtika and Sonos is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Playtika Holding 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 Playtika Holding 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 Playtika Holding i.e., Playtika Holding and Sonos go up and down completely randomly.
Pair Corralation between Playtika Holding and Sonos
Given the investment horizon of 90 days Playtika Holding is expected to generate 1.07 times less return on investment than Sonos. But when comparing it to its historical volatility, Playtika Holding Corp is 1.83 times less risky than Sonos. It trades about 0.13 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,259 in Sonos Inc on August 26, 2024 and sell it today you would earn a total of 90.00 from holding Sonos Inc or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtika Holding Corp vs. Sonos Inc
Performance |
| Timeline |
| Playtika Holding Corp |
| Sonos Inc |
Playtika Holding and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtika Holding and Sonos
The main advantage of trading using opposite Playtika Holding and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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.| Playtika Holding vs. AEye Inc | Playtika Holding vs. Arqit Quantum Warrants | Playtika Holding vs. Xos Equity Warrants |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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