Correlation Between Singing Machine and Sonos

Can any of the company-specific risk be diversified away by investing in both Singing Machine and Sonos 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 Singing Machine and Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Singing Machine and Sonos Inc, you can compare the effects of market volatilities on Singing Machine and Sonos 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 Singing Machine with a short position of Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singing Machine and Sonos.

Diversification Opportunities for Singing Machine and Sonos

-0.45

Correlation Coefficient

Singing Machine  Sonos

Very good diversification

The 3 months correlation between Singing and Sonos is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Singing Machine and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Singing Machine 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 Singing Machine are associated (or correlated) with Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Singing Machine i.e., Singing Machine and Sonos go up and down completely randomly.

Pair Corralation between Singing Machine and Sonos

Given the investment horizon of 90 days The Singing Machine is expected to under-perform the Sonos. In addition to that, Singing Machine is 3.6 times more volatile than Sonos Inc. It trades about -0.12 of its total potential returns per unit of risk. Sonos Inc is currently generating about 0.1 per unit of volatility. If you would invest  1,180  in Sonos Inc on September 1, 2024 and sell it today you would earn a total of  181.00  from holding Sonos Inc or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

The Singing Machine  vs.  Sonos Inc

Singing Machine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Singing Machine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sonos Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sonos displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singing Machine and Sonos

The main advantage of trading using opposite Singing Machine and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singing Machine position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.

The idea behind The Singing Machine and Sonos Inc 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.