Correlation Between Sonos and Cenovus

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

By analyzing existing cross correlation between Sonos Inc and Cenovus Energy 675, you can compare the effects of market volatilities on Sonos and Cenovus 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 Cenovus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Cenovus.

Diversification Opportunities for Sonos and Cenovus

-0.65

Correlation Coefficient

Sonos  Cenovus

Excellent diversification

The 3 months correlation between Sonos and Cenovus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Cenovus Energy 675 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy 675 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 Cenovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy 675 has no effect on the direction of Sonos i.e., Sonos and Cenovus go up and down completely randomly.

Pair Corralation between Sonos and Cenovus

Given the investment horizon of 90 days Sonos Inc is expected to generate 1.98 times more return on investment than Cenovus. However, Sonos is 1.98 times more volatile than Cenovus Energy 675. It trades about 0.16 of its potential returns per unit of risk. Cenovus Energy 675 is currently generating about -0.03 per unit of risk. If you would invest  1,191  in Sonos Inc on October 10, 2024 and sell it today you would earn a total of  298.00  from holding Sonos Inc or generate 25.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	59.68%
Values	Daily Returns

Sonos Inc  vs.  Cenovus Energy 675

Sonos Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 12 (%) 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.

Cenovus Energy 675

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenovus Energy 675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sonos and Cenovus

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

The idea behind Sonos Inc and Cenovus Energy 675 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.