Correlation Between Sonos and AstroNova

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

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

Diversification Opportunities for Sonos and AstroNova

-0.12

Correlation Coefficient

Sonos  AstroNova

Good diversification

The 3 months correlation between Sonos and AstroNova is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova 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 AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Sonos i.e., Sonos and AstroNova go up and down completely randomly.

Pair Corralation between Sonos and AstroNova

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the AstroNova. But the stock apears to be less risky and, when comparing its historical volatility, Sonos Inc is 1.11 times less risky than AstroNova. The stock trades about -0.24 of its potential returns per unit of risk. The AstroNova is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,736  in AstroNova on January 31, 2024 and sell it today you would earn a total of  9.00  from holding AstroNova or generate 0.52% return on investment over 90 days.

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

Sonos Inc  vs.  AstroNova

Sonos Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 5 (%) 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.

AstroNova

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstroNova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AstroNova is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sonos and AstroNova

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

The idea behind Sonos Inc and AstroNova 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.