Correlation Between Sonos and Trump Media

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

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

Diversification Opportunities for Sonos and Trump Media

-0.05

Correlation Coefficient

Sonos  Trump Media

Good diversification

The 3 months correlation between Sonos and Trump is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology 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 Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of Sonos i.e., Sonos and Trump Media go up and down completely randomly.

Pair Corralation between Sonos and Trump Media

Given the investment horizon of 90 days Sonos Inc is expected to generate 0.25 times more return on investment than Trump Media. However, Sonos Inc is 3.97 times less risky than Trump Media. It trades about 0.07 of its potential returns per unit of risk. Trump Media Technology is currently generating about -0.03 per unit of risk. If you would invest  1,306  in Sonos Inc on October 26, 2024 and sell it today you would earn a total of  104.00  from holding Sonos Inc or generate 7.96% return on investment over 90 days.

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

Sonos Inc  vs.  Trump Media Technology

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.

Trump Media Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Trump Media Technology 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sonos and Trump Media

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

The idea behind Sonos Inc and Trump Media Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .