Correlation Between Sonos and VOXX International

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

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

Diversification Opportunities for Sonos and VOXX International

0.2

Correlation Coefficient

Sonos  VOXX International

Modest diversification

The 3 months correlation between Sonos and VOXX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Sonos i.e., Sonos and VOXX International go up and down completely randomly.

Pair Corralation between Sonos and VOXX International

Given the investment horizon of 90 days Sonos Inc is expected to generate 1.39 times more return on investment than VOXX International. However, Sonos is 1.39 times more volatile than VOXX International. It trades about 0.01 of its potential returns per unit of risk. VOXX International is currently generating about -0.03 per unit of risk. If you would invest  1,361  in Sonos Inc on November 28, 2024 and sell it today you would lose (12.00) from holding Sonos Inc or give up 0.88% of portfolio value over 90 days.

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

Sonos Inc  vs.  VOXX International

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 very healthy basic indicators, Sonos is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

VOXX International

Risk-Adjusted Performance

Very Weak

Over the last 90 days VOXX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, VOXX International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sonos and VOXX International

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

The idea behind Sonos Inc and VOXX International 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.