Correlation Between Fortress Transp and Sonos

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

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

Diversification Opportunities for Fortress Transp and Sonos

0.3

Correlation Coefficient

Fortress Transp  Sonos

Weak diversification

The 3 months correlation between Fortress and Sonos is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transp Infra and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Fortress Transp 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 Fortress Transp Infra 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 Fortress Transp i.e., Fortress Transp and Sonos go up and down completely randomly.

Pair Corralation between Fortress Transp and Sonos

Given the investment horizon of 90 days Fortress Transp is expected to generate 2.91 times less return on investment than Sonos. In addition to that, Fortress Transp is 1.19 times more volatile than Sonos Inc. It trades about 0.03 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  1,258  in Sonos Inc on September 22, 2024 and sell it today you would earn a total of  198.00  from holding Sonos Inc or generate 15.74% return on investment over 90 days.

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

Fortress Transp Infra  vs.  Sonos Inc

Fortress Transp Infra

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Fortress Transp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Sonos Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 8 (%) 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 Fortress Transp and Sonos

The main advantage of trading using opposite Fortress Transp and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transp 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 Fortress Transp Infra 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.