Correlation Between Sealed Air and Sonos
Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Sonos Inc, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Sonos.
Diversification Opportunities for Sealed Air and Sonos
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sealed and Sonos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Sonos go up and down completely randomly.
Pair Corralation between Sealed Air and Sonos
Considering the 90-day investment horizon Sealed Air is expected to generate 3.82 times less return on investment than Sonos. But when comparing it to its historical volatility, Sealed Air is 1.98 times less risky than Sonos. It trades about 0.05 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,298 in Sonos Inc on August 30, 2024 and sell it today you would earn a total of 66.00 from holding Sonos Inc or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sealed Air vs. Sonos Inc
Performance |
| Timeline |
| Sealed Air |
| Sonos Inc |
Sealed Air and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Sonos
The main advantage of trading using opposite Sealed Air and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |