Correlation Between Sonos and SmartStop Self

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

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

Diversification Opportunities for Sonos and SmartStop Self

0.25

Correlation Coefficient

Sonos  SmartStop Self

Modest diversification

The 3 months correlation between Sonos and SmartStop is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage 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 SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Sonos i.e., Sonos and SmartStop Self go up and down completely randomly.

Pair Corralation between Sonos and SmartStop Self

Given the investment horizon of 90 days Sonos is expected to generate 1.76 times less return on investment than SmartStop Self. In addition to that, Sonos is 1.73 times more volatile than SmartStop Self Storage. It trades about 0.07 of its total potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.21 per unit of volatility. If you would invest  875.00  in SmartStop Self Storage on October 26, 2024 and sell it today you would earn a total of  160.00  from holding SmartStop Self Storage or generate 18.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Sonos Inc  vs.  SmartStop Self Storage

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.

SmartStop Self Storage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonos and SmartStop Self

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

The idea behind Sonos Inc and SmartStop Self Storage 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.