Correlation Between Sonos and Archstone Smith

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

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

Diversification Opportunities for Sonos and Archstone Smith

0.0

Correlation Coefficient

Sonos  Archstone Smith

Pay attention - limited upside

The 3 months correlation between Sonos and Archstone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Archstone Smith Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archstone Smith Trust and Sonos 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 Sonos Inc are associated (or correlated) with Archstone Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archstone Smith Trust has no effect on the direction of Sonos i.e., Sonos and Archstone Smith go up and down completely randomly.

Pair Corralation between Sonos and Archstone Smith

If you would invest  1,400  in Sonos Inc on October 26, 2024 and sell it today you would earn a total of  10.00  from holding Sonos Inc or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Sonos Inc  vs.  Archstone Smith Trust

Sonos Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sonos may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Archstone Smith Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archstone Smith Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Archstone Smith is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sonos and Archstone Smith

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

The idea behind Sonos Inc and Archstone Smith Trust 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.