Correlation Between Scandinavian Tobacco and Sleep Number
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Sleep Number 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 Scandinavian Tobacco and Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Sleep Number Corp, you can compare the effects of market volatilities on Scandinavian Tobacco and Sleep Number 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 Scandinavian Tobacco with a short position of Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Sleep Number.
Diversification Opportunities for Scandinavian Tobacco and Sleep Number
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and Sleep is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number Corp and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Sleep Number go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Sleep Number
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 14.91 times less return on investment than Sleep Number. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 3.74 times less risky than Sleep Number. It trades about 0.01 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,330 in Sleep Number Corp on September 5, 2024 and sell it today you would earn a total of 160.00 from holding Sleep Number Corp or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Sleep Number Corp
Performance |
| Timeline |
| Scandinavian Tobacco |
| Sleep Number Corp |
Scandinavian Tobacco and Sleep Number Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Sleep Number
The main advantage of trading using opposite Scandinavian Tobacco and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Sleep Number 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 Sleep Number will offset losses from the drop in Sleep Number's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands PLC |
| Sleep Number vs. Scandinavian Tobacco Group | Sleep Number vs. Liberty Broadband | Sleep Number vs. G III Apparel Group | Sleep Number vs. IMPERIAL TOBACCO |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |