Correlation Between Ubisoft Entertainment and Sonos

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

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

Diversification Opportunities for Ubisoft Entertainment and Sonos

-0.6

Correlation Coefficient

Ubisoft Entertainment  Sonos

Excellent diversification

The 3 months correlation between Ubisoft and Sonos is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Ubisoft Entertainment 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 Ubisoft Entertainment are associated (or correlated) with Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and Sonos go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and Sonos

Assuming the 90 days horizon Ubisoft Entertainment is expected to under-perform the Sonos. In addition to that, Ubisoft Entertainment is 2.13 times more volatile than Sonos Inc. It trades about -0.27 of its total potential returns per unit of risk. Sonos Inc is currently generating about -0.18 per unit of volatility. If you would invest  1,478  in Sonos Inc on October 25, 2024 and sell it today you would lose (64.00) from holding Sonos Inc or give up 4.33% of portfolio value over 90 days.

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

Ubisoft Entertainment  vs.  Sonos Inc

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sonos Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 6 (%) 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.

Pair Trading with Ubisoft Entertainment and Sonos

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

The idea behind Ubisoft Entertainment and Sonos Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.