Correlation Between Sonos and Unum

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

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

Diversification Opportunities for Sonos and Unum

0.4

Correlation Coefficient

Sonos  Unum

Very weak diversification

The 3 months correlation between Sonos and Unum is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Sonos i.e., Sonos and Unum go up and down completely randomly.

Pair Corralation between Sonos and Unum

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Unum. In addition to that, Sonos is 1.56 times more volatile than Unum Group. It trades about -0.19 of its total potential returns per unit of risk. Unum Group is currently generating about 0.23 per unit of volatility. If you would invest  7,278  in Unum Group on October 23, 2024 and sell it today you would earn a total of  220.00  from holding Unum Group or generate 3.02% return on investment over 90 days.

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

Sonos Inc  vs.  Unum Group

Sonos Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 7 (%) 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.

Unum Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unum Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Unum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonos and Unum

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

The idea behind Sonos Inc and Unum Group 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.