Correlation Between Steel Dynamics and Sleep Number
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics 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 Steel Dynamics and Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Sleep Number Corp, you can compare the effects of market volatilities on Steel Dynamics 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 Steel Dynamics with a short position of Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Sleep Number.
Diversification Opportunities for Steel Dynamics and Sleep Number
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Sleep is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics 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 Steel Dynamics 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 Steel Dynamics 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 Steel Dynamics i.e., Steel Dynamics and Sleep Number go up and down completely randomly.
Pair Corralation between Steel Dynamics and Sleep Number
Assuming the 90 days horizon Steel Dynamics is expected to generate 0.51 times more return on investment than Sleep Number. However, Steel Dynamics is 1.96 times less risky than Sleep Number. It trades about 0.15 of its potential returns per unit of risk. Sleep Number Corp is currently generating about -0.02 per unit of risk. If you would invest 11,570 in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of 2,100 from holding Steel Dynamics or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Sleep Number Corp
Performance |
| Timeline |
| Steel Dynamics |
| Sleep Number Corp |
Steel Dynamics and Sleep Number Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Sleep Number
The main advantage of trading using opposite Steel Dynamics and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics 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.| Steel Dynamics vs. Perma Fix Environmental Services | Steel Dynamics vs. MITSUBISHI STEEL MFG | Steel Dynamics vs. MEDICAL FACILITIES NEW | Steel Dynamics vs. ONWARD MEDICAL BV |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |