Correlation Between Sonos and Sharp

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

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

Diversification Opportunities for Sonos and Sharp

-0.83

Correlation Coefficient

Sonos  Sharp

Pay attention - limited upside

The 3 months correlation between Sonos and Sharp is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Sharp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp 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 Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp has no effect on the direction of Sonos i.e., Sonos and Sharp go up and down completely randomly.

Pair Corralation between Sonos and Sharp

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Sharp. In addition to that, Sonos is 2.8 times more volatile than Sharp. It trades about -0.17 of its total potential returns per unit of risk. Sharp is currently generating about 0.13 per unit of volatility. If you would invest  585.00  in Sharp on December 27, 2024 and sell it today you would earn a total of  42.00  from holding Sharp or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Sonos Inc  vs.  Sharp

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.

Sharp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sharp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sonos and Sharp

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

The idea behind Sonos Inc and Sharp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.