Correlation Between Celsius Holdings and Sonos

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

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

Diversification Opportunities for Celsius Holdings and Sonos

0.68

Correlation Coefficient

Celsius Holdings  Sonos

Poor diversification

The 3 months correlation between Celsius and Sonos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Celsius Holdings 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 Celsius Holdings 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 Celsius Holdings i.e., Celsius Holdings and Sonos go up and down completely randomly.

Pair Corralation between Celsius Holdings and Sonos

Given the investment horizon of 90 days Celsius Holdings is expected to generate 1.2 times more return on investment than Sonos. However, Celsius Holdings is 1.2 times more volatile than Sonos Inc. It trades about 0.1 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.01 per unit of risk. If you would invest  3,445  in Celsius Holdings on January 26, 2024 and sell it today you would earn a total of  3,755  from holding Celsius Holdings or generate 109.0% return on investment over 90 days.

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

Celsius Holdings  vs.  Sonos Inc

Celsius Holdings

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Celsius Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sonos Inc

Risk-Adjusted Performance

3 of 100

Insignificant

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 May 2024.

Pair Trading with Celsius Holdings and Sonos

The main advantage of trading using opposite Celsius Holdings and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celsius Holdings 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 Celsius Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.