Correlation Between Sonos and World Houseware

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

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

Diversification Opportunities for Sonos and World Houseware

0.0

Correlation Coefficient

Sonos  World Houseware

Pay attention - limited upside

The 3 months correlation between Sonos and World is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and World Houseware Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Houseware and Sonos 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 Sonos Inc are associated (or correlated) with World Houseware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Houseware has no effect on the direction of Sonos i.e., Sonos and World Houseware go up and down completely randomly.

Pair Corralation between Sonos and World Houseware

If you would invest  1,306  in Sonos Inc on August 27, 2024 and sell it today you would earn a total of  43.00  from holding Sonos Inc or generate 3.29% return on investment over 90 days.

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

Sonos Inc  vs.  World Houseware Limited

Sonos Inc

Risk-Adjusted Performance

6 of 100

Modest

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 weak basic indicators, Sonos may actually be approaching a critical reversion point that can send shares even higher in December 2024.

World Houseware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Houseware Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, World Houseware is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sonos and World Houseware

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

The idea behind Sonos Inc and World Houseware Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.