Correlation Between Trade Desk and Sony
Can any of the company-specific risk be diversified away by investing in both Trade Desk and Sony 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 Trade Desk and Sony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and Sony Group, you can compare the effects of market volatilities on Trade Desk and Sony 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 Trade Desk with a short position of Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and Sony.
Diversification Opportunities for Trade Desk and Sony
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Trade and Sony is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group and Trade Desk 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 The Trade Desk are associated (or correlated) with Sony. 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 has no effect on the direction of Trade Desk i.e., Trade Desk and Sony go up and down completely randomly.
Pair Corralation between Trade Desk and Sony
Assuming the 90 days trading horizon Trade Desk is expected to generate 1.15 times less return on investment than Sony. In addition to that, Trade Desk is 1.14 times more volatile than Sony Group. It trades about 0.17 of its total potential returns per unit of risk. Sony Group is currently generating about 0.22 per unit of volatility. If you would invest 10,160 in Sony Group on August 28, 2024 and sell it today you would earn a total of 1,163 from holding Sony Group or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Trade Desk vs. Sony Group
Performance |
| Timeline |
| Trade Desk |
| Sony Group |
Trade Desk and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and Sony
The main advantage of trading using opposite Trade Desk and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk position performs unexpectedly, Sony 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 will offset losses from the drop in Sony's long position.| Trade Desk vs. BIONTECH SE DRN | Trade Desk vs. Take Two Interactive Software | Trade Desk vs. Spotify Technology SA | Trade Desk vs. Mangels Industrial SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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