Correlation Between Natuzzi SpA and Tempur Sealy
Can any of the company-specific risk be diversified away by investing in both Natuzzi SpA and Tempur Sealy 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 Natuzzi SpA and Tempur Sealy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natuzzi SpA and Tempur Sealy International, you can compare the effects of market volatilities on Natuzzi SpA and Tempur Sealy 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 Natuzzi SpA with a short position of Tempur Sealy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natuzzi SpA and Tempur Sealy.
Diversification Opportunities for Natuzzi SpA and Tempur Sealy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natuzzi and Tempur is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Natuzzi SpA and Tempur Sealy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempur Sealy Interna and Natuzzi SpA 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 Natuzzi SpA are associated (or correlated) with Tempur Sealy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempur Sealy Interna has no effect on the direction of Natuzzi SpA i.e., Natuzzi SpA and Tempur Sealy go up and down completely randomly.
Pair Corralation between Natuzzi SpA and Tempur Sealy
Considering the 90-day investment horizon Natuzzi SpA is expected to generate 41.55 times more return on investment than Tempur Sealy. However, Natuzzi SpA is 41.55 times more volatile than Tempur Sealy International. It trades about 0.08 of its potential returns per unit of risk. Tempur Sealy International is currently generating about 0.05 per unit of risk. If you would invest 590.00 in Natuzzi SpA on September 3, 2024 and sell it today you would lose (136.00) from holding Natuzzi SpA or give up 23.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.52% |
| Values | Daily Returns |
Natuzzi SpA vs. Tempur Sealy International
Performance |
| Timeline |
| Natuzzi SpA |
| Tempur Sealy Interna |
Natuzzi SpA and Tempur Sealy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natuzzi SpA and Tempur Sealy
The main advantage of trading using opposite Natuzzi SpA and Tempur Sealy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natuzzi SpA position performs unexpectedly, Tempur Sealy 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 Tempur Sealy will offset losses from the drop in Tempur Sealy's long position.| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
| Tempur Sealy vs. Bassett Furniture Industries | Tempur Sealy vs. Ethan Allen Interiors | Tempur Sealy vs. Natuzzi SpA | Tempur Sealy vs. Flexsteel Industries |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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