Correlation Between BANCO and Sonos

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

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

Diversification Opportunities for BANCO and Sonos

0.23

Correlation Coefficient

BANCO  Sonos

Modest diversification

The 3 months correlation between BANCO and Sonos is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and BANCO 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 BANCO SANTANDER SA 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 BANCO i.e., BANCO and Sonos go up and down completely randomly.

Pair Corralation between BANCO and Sonos

Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to generate 0.52 times more return on investment than Sonos. However, BANCO SANTANDER SA is 1.91 times less risky than Sonos. It trades about 0.0 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.13 per unit of risk. If you would invest  9,912  in BANCO SANTANDER SA on December 22, 2024 and sell it today you would lose (26.00) from holding BANCO SANTANDER SA or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.0%
Values	Daily Returns

BANCO SANTANDER SA  vs.  Sonos Inc

BANCO SANTANDER SA

Risk-Adjusted Performance

Very Weak

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

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BANCO and Sonos

The main advantage of trading using opposite BANCO and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANCO 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 BANCO SANTANDER SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.