Correlation Between Sleep Number and Electrolux Professional
Can any of the company-specific risk be diversified away by investing in both Sleep Number and Electrolux Professional 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 Sleep Number and Electrolux Professional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sleep Number Corp and Electrolux Professional AB, you can compare the effects of market volatilities on Sleep Number and Electrolux Professional 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 Sleep Number with a short position of Electrolux Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and Electrolux Professional.
Diversification Opportunities for Sleep Number and Electrolux Professional
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sleep and Electrolux is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Electrolux Professional AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrolux Professional and Sleep Number 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 Sleep Number Corp are associated (or correlated) with Electrolux Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrolux Professional has no effect on the direction of Sleep Number i.e., Sleep Number and Electrolux Professional go up and down completely randomly.
Pair Corralation between Sleep Number and Electrolux Professional
Assuming the 90 days horizon Sleep Number Corp is expected to generate 1.58 times more return on investment than Electrolux Professional. However, Sleep Number is 1.58 times more volatile than Electrolux Professional AB. It trades about 0.1 of its potential returns per unit of risk. Electrolux Professional AB is currently generating about 0.04 per unit of risk. If you would invest 1,590 in Sleep Number Corp on October 21, 2024 and sell it today you would earn a total of 80.00 from holding Sleep Number Corp or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sleep Number Corp vs. Electrolux Professional AB
Performance |
| Timeline |
| Sleep Number Corp |
| Electrolux Professional |
Sleep Number and Electrolux Professional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sleep Number and Electrolux Professional
The main advantage of trading using opposite Sleep Number and Electrolux Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sleep Number position performs unexpectedly, Electrolux Professional 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 Electrolux Professional will offset losses from the drop in Electrolux Professional's long position.| Sleep Number vs. Qingdao Haier Co | Sleep Number vs. Qingdao Haier Co | Sleep Number vs. Mohawk Industries | Sleep Number vs. SEB SA |
| Electrolux Professional vs. CHINA TONTINE WINES | Electrolux Professional vs. H2O Retailing | Electrolux Professional vs. SALESFORCE INC CDR | Electrolux Professional vs. Brockhaus Capital Management |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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