Correlation Between Sonos and Super Micro

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

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

Diversification Opportunities for Sonos and Super Micro

0.79

Correlation Coefficient

Sonos  Super Micro

Poor diversification

The 3 months correlation between Sonos and Super is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Super Micro Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Micro Computer 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 Super Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Micro Computer has no effect on the direction of Sonos i.e., Sonos and Super Micro go up and down completely randomly.

Pair Corralation between Sonos and Super Micro

Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Super Micro. But the stock apears to be less risky and, when comparing its historical volatility, Sonos Inc is 1.95 times less risky than Super Micro. The stock trades about 0.0 of its potential returns per unit of risk. The Super Micro Computer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  630.00  in Super Micro Computer on July 13, 2024 and sell it today you would earn a total of  4,017  from holding Super Micro Computer or generate 637.62% return on investment over 90 days.

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

Sonos Inc  vs.  Super Micro Computer

Sonos Inc

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Super Micro Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Micro Computer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Sonos and Super Micro

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

The idea behind Sonos Inc and Super Micro Computer 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.