Correlation Between Sonos and Enlight Renewable

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

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

Diversification Opportunities for Sonos and Enlight Renewable

0.09

Correlation Coefficient

Sonos  Enlight Renewable

Significant diversification

The 3 months correlation between Sonos and Enlight is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Sonos i.e., Sonos and Enlight Renewable go up and down completely randomly.

Pair Corralation between Sonos and Enlight Renewable

Given the investment horizon of 90 days Sonos Inc is expected to generate 0.96 times more return on investment than Enlight Renewable. However, Sonos Inc is 1.04 times less risky than Enlight Renewable. It trades about 0.13 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.02 per unit of risk. If you would invest  1,213  in Sonos Inc on September 16, 2024 and sell it today you would earn a total of  244.00  from holding Sonos Inc or generate 20.12% return on investment over 90 days.

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

Sonos Inc  vs.  Enlight Renewable Energy

Sonos Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 9 (%) 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.

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sonos and Enlight Renewable

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

The idea behind Sonos Inc and Enlight Renewable Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.