Correlation Between Apple and Sonos

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

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

Diversification Opportunities for Apple and Sonos

-0.3

Correlation Coefficient

Apple  Sonos

Very good diversification

The 3 months correlation between Apple and Sonos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Apple 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 Apple Inc 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 Apple i.e., Apple and Sonos go up and down completely randomly.

Pair Corralation between Apple and Sonos

Given the investment horizon of 90 days Apple Inc is expected to generate 0.94 times more return on investment than Sonos. However, Apple Inc is 1.06 times less risky than Sonos. It trades about 0.01 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.3 per unit of risk. If you would invest  17,003  in Apple Inc on February 1, 2024 and sell it today you would earn a total of  30.00  from holding Apple Inc or generate 0.18% return on investment over 90 days.

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

Apple Inc  vs.  Sonos Inc

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sonos Inc

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 3 (%) 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 June 2024.

Pair Trading with Apple and Sonos

The main advantage of trading using opposite Apple and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..