Correlation Between PACIFIC and Sonos

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

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

Diversification Opportunities for PACIFIC and Sonos

-0.46

Correlation Coefficient

PACIFIC  Sonos

Very good diversification

The 3 months correlation between PACIFIC and Sonos is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and PACIFIC 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 PACIFIC GAS AND 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 PACIFIC i.e., PACIFIC and Sonos go up and down completely randomly.

Pair Corralation between PACIFIC and Sonos

Assuming the 90 days trading horizon PACIFIC GAS AND is expected to under-perform the Sonos. But the bond apears to be less risky and, when comparing its historical volatility, PACIFIC GAS AND is 1.31 times less risky than Sonos. The bond trades about -0.14 of its potential returns per unit of risk. The Sonos Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,189  in Sonos Inc on October 5, 2024 and sell it today you would earn a total of  285.00  from holding Sonos Inc or generate 23.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

PACIFIC GAS AND  vs.  Sonos Inc

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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 PACIFIC GAS AND investors.

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.

Pair Trading with PACIFIC and Sonos

The main advantage of trading using opposite PACIFIC and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC 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 PACIFIC GAS AND 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.