Correlation Between EZGO Technologies and Sonos

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

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

Diversification Opportunities for EZGO Technologies and Sonos

-0.73

Correlation Coefficient

EZGO Technologies  Sonos

Pay attention - limited upside

The 3 months correlation between EZGO and Sonos is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and EZGO Technologies 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 EZGO Technologies 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 EZGO Technologies i.e., EZGO Technologies and Sonos go up and down completely randomly.

Pair Corralation between EZGO Technologies and Sonos

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Sonos. In addition to that, EZGO Technologies is 2.18 times more volatile than Sonos Inc. It trades about -0.12 of its total potential returns per unit of risk. Sonos Inc is currently generating about 0.1 per unit of volatility. If you would invest  1,180  in Sonos Inc on September 2, 2024 and sell it today you would earn a total of  181.00  from holding Sonos Inc or generate 15.34% return on investment over 90 days.

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

EZGO Technologies  vs.  Sonos Inc

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sonos Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 7 (%) 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.

Pair Trading with EZGO Technologies and Sonos

The main advantage of trading using opposite EZGO Technologies and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZGO Technologies 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 EZGO Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.