Correlation Between National CineMedia and Sonos
Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Sonos Inc, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Sonos.
Diversification Opportunities for National CineMedia and Sonos
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Sonos is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Sonos go up and down completely randomly.
Pair Corralation between National CineMedia and Sonos
Given the investment horizon of 90 days National CineMedia is expected to generate 2.7 times more return on investment than Sonos. However, National CineMedia is 2.7 times more volatile than Sonos Inc. It trades about 0.06 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.01 per unit of risk. If you would invest 239.00 in National CineMedia on September 18, 2024 and sell it today you would earn a total of 485.00 from holding National CineMedia or generate 202.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
National CineMedia vs. Sonos Inc
Performance |
Timeline |
National CineMedia |
Sonos Inc |
National CineMedia and Sonos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National CineMedia and Sonos
The main advantage of trading using opposite National CineMedia and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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