Correlation Between Sonos and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Sonos and Chesapeake Energy 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 Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Chesapeake Energy, you can compare the effects of market volatilities on Sonos and Chesapeake Energy 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 Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Chesapeake Energy.
Diversification Opportunities for Sonos and Chesapeake Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sonos and Chesapeake is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy 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 Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Sonos i.e., Sonos and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Sonos and Chesapeake Energy
Given the investment horizon of 90 days Sonos Inc is expected to generate 1.23 times more return on investment than Chesapeake Energy. However, Sonos is 1.23 times more volatile than Chesapeake Energy. It trades about 0.02 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.01 per unit of risk. If you would invest 1,432 in Sonos Inc on September 14, 2024 and sell it today you would earn a total of 26.00 from holding Sonos Inc or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.04% |
| Values | Daily Returns |
Sonos Inc vs. Chesapeake Energy
Performance |
| Timeline |
| Sonos Inc |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Sonos and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Chesapeake Energy
The main advantage of trading using opposite Sonos and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Chesapeake Energy 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 Chesapeake Energy will offset losses from the drop in Chesapeake Energy's long position.| Sonos vs. LG Display Co | Sonos vs. Turtle Beach Corp | Sonos vs. Sony Group Corp | Sonos vs. Universal Electronics |
| Chesapeake Energy vs. Jabil Circuit | Chesapeake Energy vs. Sonos Inc | Chesapeake Energy vs. NETGEAR | Chesapeake Energy vs. Monster Beverage Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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