Correlation Between Sonos and BSANCI

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

By analyzing existing cross correlation between Sonos Inc and BSANCI 27 10 JAN 25, you can compare the effects of market volatilities on Sonos and BSANCI 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 BSANCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and BSANCI.

Diversification Opportunities for Sonos and BSANCI

0.69

Correlation Coefficient

Sonos  BSANCI

Poor diversification

The 3 months correlation between Sonos and BSANCI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and BSANCI 27 10 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSANCI 27 10 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 BSANCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSANCI 27 10 has no effect on the direction of Sonos i.e., Sonos and BSANCI go up and down completely randomly.

Pair Corralation between Sonos and BSANCI

Given the investment horizon of 90 days Sonos Inc is expected to generate 0.97 times more return on investment than BSANCI. However, Sonos Inc is 1.03 times less risky than BSANCI. It trades about 0.01 of its potential returns per unit of risk. BSANCI 27 10 JAN 25 is currently generating about -0.96 per unit of risk. If you would invest  1,488  in Sonos Inc on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Sonos Inc or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	15.0%
Values	Daily Returns

Sonos Inc  vs.  BSANCI 27 10 JAN 25

Sonos Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 13 (%) 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.

BSANCI 27 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSANCI 27 10 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BSANCI 27 10 JAN 25 investors.

Pair Trading with Sonos and BSANCI

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

The idea behind Sonos Inc and BSANCI 27 10 JAN 25 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.