Correlation Between Sonos and Apple
Can any of the company-specific risk be diversified away by investing in both Sonos and Apple 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 Sonos and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Apple Inc, you can compare the effects of market volatilities on Sonos and Apple 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 Sonos with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Apple.
Diversification Opportunities for Sonos and Apple
Modest diversification
The 3 months correlation between Sonos and Apple is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Sonos 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 Sonos Inc are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Sonos i.e., Sonos and Apple go up and down completely randomly.
Pair Corralation between Sonos and Apple
Given the investment horizon of 90 days Sonos Inc is expected to generate 2.58 times more return on investment than Apple. However, Sonos is 2.58 times more volatile than Apple Inc. It trades about 0.14 of its potential returns per unit of risk. Apple Inc is currently generating about -0.03 per unit of risk. If you would invest 1,254 in Sonos Inc on August 24, 2024 and sell it today you would earn a total of 96.00 from holding Sonos Inc or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonos Inc vs. Apple Inc
Performance |
| Timeline |
| Sonos Inc |
| Apple Inc |
Sonos and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Apple
The main advantage of trading using opposite Sonos and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Sonos Inc and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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.
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