Correlation Between ELECTROLUX and Sleep Number
Can any of the company-specific risk be diversified away by investing in both ELECTROLUX 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 ELECTROLUX and Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTROLUX B ADR2 and Sleep Number Corp, you can compare the effects of market volatilities on ELECTROLUX 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 ELECTROLUX with a short position of Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTROLUX and Sleep Number.
Diversification Opportunities for ELECTROLUX and Sleep Number
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ELECTROLUX and Sleep is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ELECTROLUX B ADR2 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 ELECTROLUX 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 ELECTROLUX B ADR2 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 ELECTROLUX i.e., ELECTROLUX and Sleep Number go up and down completely randomly.
Pair Corralation between ELECTROLUX and Sleep Number
Assuming the 90 days trading horizon ELECTROLUX is expected to generate 3.67 times less return on investment than Sleep Number. But when comparing it to its historical volatility, ELECTROLUX B ADR2 is 2.45 times less risky than Sleep Number. It trades about 0.22 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,310 in Sleep Number Corp on September 14, 2024 and sell it today you would earn a total of 610.00 from holding Sleep Number Corp or generate 46.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTROLUX B ADR2 vs. Sleep Number Corp
Performance |
| Timeline |
| ELECTROLUX B ADR2 |
| Sleep Number Corp |
ELECTROLUX and Sleep Number Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTROLUX and Sleep Number
The main advantage of trading using opposite ELECTROLUX and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTROLUX 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.| ELECTROLUX vs. EVS Broadcast Equipment | ELECTROLUX vs. PT Global Mediacom | ELECTROLUX vs. PRECISION DRILLING P | ELECTROLUX vs. TITANIUM TRANSPORTGROUP |
| Sleep Number vs. AGNC INVESTMENT | Sleep Number vs. CVR Medical Corp | Sleep Number vs. HK Electric Investments | Sleep Number vs. CDL 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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