Correlation Between Sonos and Sony Group
Can any of the company-specific risk be diversified away by investing in both Sonos and Sony Group 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 Sony Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Sony Group Corp, you can compare the effects of market volatilities on Sonos and Sony Group 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 Sony Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Sony Group.
Diversification Opportunities for Sonos and Sony Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonos and Sony is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group Corp 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Sonos i.e., Sonos and Sony Group go up and down completely randomly.
Pair Corralation between Sonos and Sony Group
Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Sony Group. But the stock apears to be less risky and, when comparing its historical volatility, Sonos Inc is 1.44 times less risky than Sony Group. The stock trades about -0.26 of its potential returns per unit of risk. The Sony Group Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,109 in Sony Group Corp on November 3, 2024 and sell it today you would earn a total of 92.00 from holding Sony Group Corp or generate 4.36% 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. Sony Group Corp
Performance |
| Timeline |
| Sonos Inc |
| Sony Group Corp |
Sonos and Sony Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Sony Group
The main advantage of trading using opposite Sonos and Sony Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, Sony Group 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 Sony Group will offset losses from the drop in Sony Group's long position.The idea behind Sonos Inc and Sony Group Corp 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.| Sony Group vs. Universal Electronics | Sony Group vs. VOXX International | Sony Group vs. Samsung Electronics Co | Sony Group vs. Sharp |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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