Correlation Between Sony and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Sony and Seagate Technology 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 Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Seagate Technology Holdings, you can compare the effects of market volatilities on Sony and Seagate Technology 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 Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Seagate Technology.
Diversification Opportunities for Sony and Seagate Technology
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sony and Seagate is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Seagate Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology has no effect on the direction of Sony i.e., Sony and Seagate Technology go up and down completely randomly.
Pair Corralation between Sony and Seagate Technology
Assuming the 90 days trading horizon Sony Group is expected to under-perform the Seagate Technology. But the stock apears to be less risky and, when comparing its historical volatility, Sony Group is 1.98 times less risky than Seagate Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Seagate Technology Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 54,215 in Seagate Technology Holdings on November 3, 2024 and sell it today you would earn a total of 6,114 from holding Seagate Technology Holdings or generate 11.28% 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. Seagate Technology Holdings
Performance |
| Timeline |
| Sony Group |
| Seagate Technology |
Sony and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Seagate Technology
The main advantage of trading using opposite Sony and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Seagate Technology 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Sony vs. JB Hunt Transport | Sony vs. Liberty Broadband | Sony vs. New Oriental Education | Sony vs. Broadridge Financial Solutions, |
| Seagate Technology vs. Arista Networks | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Western Digital | Seagate Technology vs. Positivo Tecnologia SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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