Correlation Between Sonos and Universal Display

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

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

Diversification Opportunities for Sonos and Universal Display

-0.29

Correlation Coefficient

Sonos  Universal Display

Very good diversification

The 3 months correlation between Sonos and Universal is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of Sonos i.e., Sonos and Universal Display go up and down completely randomly.

Pair Corralation between Sonos and Universal Display

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Universal Display. In addition to that, Sonos is 1.07 times more volatile than Universal Display. It trades about -0.17 of its total potential returns per unit of risk. Universal Display is currently generating about 0.0 per unit of volatility. If you would invest  14,708  in Universal Display on December 29, 2024 and sell it today you would lose (191.00) from holding Universal Display or give up 1.3% of portfolio value over 90 days.

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

Sonos Inc  vs.  Universal Display

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.

Universal Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Universal Display is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sonos and Universal Display

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

The idea behind Sonos Inc and Universal Display 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.