Correlation Between Sleep Number and ELECTROLUX
Can any of the company-specific risk be diversified away by investing in both Sleep Number and ELECTROLUX 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 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 B ADR2, you can compare the effects of market volatilities on Sleep Number and ELECTROLUX 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and ELECTROLUX.
Diversification Opportunities for Sleep Number and ELECTROLUX
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sleep and ELECTROLUX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and ELECTROLUX B ADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTROLUX B ADR2 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTROLUX B ADR2 has no effect on the direction of Sleep Number i.e., Sleep Number and ELECTROLUX go up and down completely randomly.
Pair Corralation between Sleep Number and ELECTROLUX
Assuming the 90 days horizon Sleep Number Corp is expected to generate 2.45 times more return on investment than ELECTROLUX. However, Sleep Number is 2.45 times more volatile than ELECTROLUX B ADR2. It trades about 0.33 of its potential returns per unit of risk. ELECTROLUX B ADR2 is currently generating about 0.22 per unit of risk. 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 |
Sleep Number Corp vs. ELECTROLUX B ADR2
Performance |
| Timeline |
| Sleep Number Corp |
| ELECTROLUX B ADR2 |
Sleep Number and ELECTROLUX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sleep Number and ELECTROLUX
The main advantage of trading using opposite Sleep Number and ELECTROLUX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sleep Number position performs unexpectedly, ELECTROLUX 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 will offset losses from the drop in ELECTROLUX's long position.| Sleep Number vs. AGNC INVESTMENT | Sleep Number vs. CVR Medical Corp | Sleep Number vs. HK Electric Investments | Sleep Number vs. CDL INVESTMENT |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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