Correlation Between ALGOMA STEEL and Sleep Number
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL 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 ALGOMA STEEL and Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALGOMA STEEL GROUP and Sleep Number Corp, you can compare the effects of market volatilities on ALGOMA STEEL 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 ALGOMA STEEL with a short position of Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Sleep Number.
Diversification Opportunities for ALGOMA STEEL and Sleep Number
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALGOMA and Sleep is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL 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 ALGOMA STEEL 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 ALGOMA STEEL 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 ALGOMA STEEL i.e., ALGOMA STEEL and Sleep Number go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Sleep Number
Assuming the 90 days horizon ALGOMA STEEL is expected to generate 1.89 times less return on investment than Sleep Number. But when comparing it to its historical volatility, ALGOMA STEEL GROUP is 2.25 times less risky than Sleep Number. It trades about 0.05 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 1,520 in Sleep Number Corp on September 12, 2024 and sell it today you would earn a total of 350.00 from holding Sleep Number Corp or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Sleep Number Corp
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Sleep Number Corp |
ALGOMA STEEL and Sleep Number Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Sleep Number
The main advantage of trading using opposite ALGOMA STEEL and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL 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.| ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. NIPPON STEEL SPADR | ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL vs. Superior Plus Corp |
| Sleep Number vs. Qingdao Haier Co | Sleep Number vs. Qingdao Haier Co | Sleep Number vs. Mohawk Industries | Sleep Number vs. SEB SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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