Correlation Between Vince Holding and Sonos

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

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

Diversification Opportunities for Vince Holding and Sonos

0.24

Correlation Coefficient

Vince Holding  Sonos

Modest diversification

The 3 months correlation between Vince and Sonos is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Vince Holding 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 Vince Holding Corp 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 Vince Holding i.e., Vince Holding and Sonos go up and down completely randomly.

Pair Corralation between Vince Holding and Sonos

Given the investment horizon of 90 days Vince Holding Corp is expected to generate 4.15 times more return on investment than Sonos. However, Vince Holding is 4.15 times more volatile than Sonos Inc. It trades about 0.03 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.05 per unit of risk. If you would invest  295.00  in Vince Holding Corp on December 5, 2024 and sell it today you would lose (48.00) from holding Vince Holding Corp or give up 16.27% of portfolio value over 90 days.

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

Vince Holding Corp  vs.  Sonos Inc

Vince Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vince Holding Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Vince Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Vince Holding and Sonos

The main advantage of trading using opposite Vince Holding and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vince Holding 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 Vince Holding Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.