Correlation Between Pinterest and Sonos

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

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

Diversification Opportunities for Pinterest and Sonos

-0.25

Correlation Coefficient

Pinterest  Sonos

Very good diversification

The 3 months correlation between Pinterest and Sonos is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Sonos go up and down completely randomly.

Pair Corralation between Pinterest and Sonos

Given the investment horizon of 90 days Pinterest is expected to generate 3.43 times less return on investment than Sonos. In addition to that, Pinterest is 1.04 times more volatile than Sonos Inc. It trades about 0.03 of its total potential returns per unit of risk. Sonos Inc is currently generating about 0.11 per unit of volatility. If you would invest  1,247  in Sonos Inc on September 17, 2024 and sell it today you would earn a total of  219.00  from holding Sonos Inc or generate 17.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pinterest  vs.  Sonos Inc

Pinterest

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the 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 Pinterest and Sonos

The main advantage of trading using opposite Pinterest and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.