Correlation Between Sonos and Assurant

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

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

Diversification Opportunities for Sonos and Assurant

0.7

Correlation Coefficient

Sonos  Assurant

Poor diversification

The 3 months correlation between Sonos and Assurant is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Sonos i.e., Sonos and Assurant go up and down completely randomly.

Pair Corralation between Sonos and Assurant

Given the investment horizon of 90 days Sonos Inc is expected to generate 1.62 times more return on investment than Assurant. However, Sonos is 1.62 times more volatile than Assurant. It trades about 0.14 of its potential returns per unit of risk. Assurant is currently generating about 0.09 per unit of risk. If you would invest  1,229  in Sonos Inc on September 30, 2024 and sell it today you would earn a total of  273.00  from holding Sonos Inc or generate 22.21% 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.  Assurant

Sonos Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 11 (%) 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.

Assurant

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sonos and Assurant

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

The idea behind Sonos Inc and Assurant 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.