Correlation Between Sonos and Turtle Beach

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

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

Diversification Opportunities for Sonos and Turtle Beach

0.65

Correlation Coefficient

Sonos  Turtle Beach

Poor diversification

The 3 months correlation between Sonos and Turtle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Turtle Beach Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turtle Beach Corp 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 Turtle Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turtle Beach Corp has no effect on the direction of Sonos i.e., Sonos and Turtle Beach go up and down completely randomly.

Pair Corralation between Sonos and Turtle Beach

Given the investment horizon of 90 days Sonos Inc is expected to generate 0.88 times more return on investment than Turtle Beach. However, Sonos Inc is 1.14 times less risky than Turtle Beach. It trades about 0.08 of its potential returns per unit of risk. Turtle Beach Corp is currently generating about 0.06 per unit of risk. If you would invest  1,223  in Sonos Inc on August 30, 2024 and sell it today you would earn a total of  141.00  from holding Sonos Inc or generate 11.53% 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.  Turtle Beach Corp

Sonos Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 6 (%) 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.

Turtle Beach Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turtle Beach Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Turtle Beach may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Sonos and Turtle Beach

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

The idea behind Sonos Inc and Turtle Beach Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.