Correlation Between Sony and PBG SA
Can any of the company-specific risk be diversified away by investing in both Sony and PBG SA 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 and PBG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and PBG SA, you can compare the effects of market volatilities on Sony and PBG SA 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 with a short position of PBG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and PBG SA.
Diversification Opportunities for Sony and PBG SA
Very good diversification
The 3 months correlation between Sony and PBG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and PBG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBG SA and Sony 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 Group are associated (or correlated) with PBG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBG SA has no effect on the direction of Sony i.e., Sony and PBG SA go up and down completely randomly.
Pair Corralation between Sony and PBG SA
Assuming the 90 days trading horizon Sony Group is expected to generate 0.65 times more return on investment than PBG SA. However, Sony Group is 1.55 times less risky than PBG SA. It trades about 0.31 of its potential returns per unit of risk. PBG SA is currently generating about 0.02 per unit of risk. If you would invest 10,228 in Sony Group on September 1, 2024 and sell it today you would earn a total of 1,838 from holding Sony Group or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. PBG SA
Performance |
| Timeline |
| Sony Group |
| PBG SA |
Sony and PBG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and PBG SA
The main advantage of trading using opposite Sony and PBG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, PBG SA 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 PBG SA will offset losses from the drop in PBG SA's long position.| Sony vs. Apartment Investment and | Sony vs. Fidelity National Information | Sony vs. Micron Technology | Sony vs. Ross Stores |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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