Correlation Between Sonos and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Sonos and Kenon Holdings 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 Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Kenon Holdings, you can compare the effects of market volatilities on Sonos and Kenon Holdings 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 Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Kenon Holdings.
Diversification Opportunities for Sonos and Kenon Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonos and Kenon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings 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 Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of Sonos i.e., Sonos and Kenon Holdings go up and down completely randomly.
Pair Corralation between Sonos and Kenon Holdings
Given the investment horizon of 90 days Sonos is expected to generate 20.41 times less return on investment than Kenon Holdings. In addition to that, Sonos is 1.09 times more volatile than Kenon Holdings. It trades about 0.01 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.12 per unit of volatility. If you would invest 1,606 in Kenon Holdings on October 21, 2024 and sell it today you would earn a total of 1,731 from holding Kenon Holdings or generate 107.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonos Inc vs. Kenon Holdings
Performance |
| Timeline |
| Sonos Inc |
| Kenon Holdings |
Sonos and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Kenon Holdings
The main advantage of trading using opposite Sonos and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.The idea behind Sonos Inc and Kenon Holdings 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.| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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