Correlation Between Sonos and Otsuka
Can any of the company-specific risk be diversified away by investing in both Sonos and Otsuka 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 Otsuka into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Otsuka, you can compare the effects of market volatilities on Sonos and Otsuka 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 Otsuka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Otsuka.
Diversification Opportunities for Sonos and Otsuka
Poor diversification
The 3 months correlation between Sonos and Otsuka is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Otsuka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka 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 Otsuka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka has no effect on the direction of Sonos i.e., Sonos and Otsuka go up and down completely randomly.
Pair Corralation between Sonos and Otsuka
If you would invest 1,434 in Sonos Inc on September 12, 2024 and sell it today you would earn a total of 11.50 from holding Sonos Inc or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Sonos Inc vs. Otsuka
Performance |
| Timeline |
| Sonos Inc |
| Otsuka |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sonos and Otsuka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Otsuka
The main advantage of trading using opposite Sonos and Otsuka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Otsuka 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 Otsuka will offset losses from the drop in Otsuka's long position.The idea behind Sonos Inc and Otsuka 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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