Correlation Between Sonos and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Sonos and Schibsted ASA 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 Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Schibsted ASA ADR, you can compare the effects of market volatilities on Sonos and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Schibsted ASA.
Diversification Opportunities for Sonos and Schibsted ASA
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonos and Schibsted is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Schibsted ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA ADR 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA ADR has no effect on the direction of Sonos i.e., Sonos and Schibsted ASA go up and down completely randomly.
Pair Corralation between Sonos and Schibsted ASA
Given the investment horizon of 90 days Sonos is expected to generate 3139.0 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, Sonos Inc is 2.21 times less risky than Schibsted ASA. It trades about 0.0 of its potential returns per unit of risk. Schibsted ASA ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,855 in Schibsted ASA ADR on October 9, 2024 and sell it today you would earn a total of 1,279 from holding Schibsted ASA ADR or generate 68.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.63% |
| Values | Daily Returns |
Sonos Inc vs. Schibsted ASA ADR
Performance |
| Timeline |
| Sonos Inc |
| Schibsted ASA ADR |
Sonos and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Schibsted ASA
The main advantage of trading using opposite Sonos and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.The idea behind Sonos Inc and Schibsted ASA ADR 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.| Schibsted ASA vs. Acco Brands | Schibsted ASA vs. BK Technologies | Schibsted ASA vs. Pearson PLC ADR | Schibsted ASA vs. Hewlett Packard Enterprise |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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