Correlation Between Ralph Lauren and Sonos

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

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

Diversification Opportunities for Ralph Lauren and Sonos

0.01

Correlation Coefficient

Ralph Lauren  Sonos

Significant diversification

The 3 months correlation between Ralph and Sonos is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Ralph Lauren 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 Ralph Lauren Corp 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 Ralph Lauren i.e., Ralph Lauren and Sonos go up and down completely randomly.

Pair Corralation between Ralph Lauren and Sonos

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.97 times more return on investment than Sonos. However, Ralph Lauren Corp is 1.04 times less risky than Sonos. It trades about 0.0 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.17 per unit of risk. If you would invest  22,955  in Ralph Lauren Corp on December 27, 2024 and sell it today you would lose (467.00) from holding Ralph Lauren Corp or give up 2.03% of portfolio value over 90 days.

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

Ralph Lauren Corp  vs.  Sonos Inc

Ralph Lauren Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Ralph Lauren Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Sonos Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ralph Lauren and Sonos

The main advantage of trading using opposite Ralph Lauren and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren 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 Ralph Lauren Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.