Correlation Between Sleep Number and Ethan Allen
Can any of the company-specific risk be diversified away by investing in both Sleep Number and Ethan Allen 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 Ethan Allen 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 Ethan Allen Interiors, you can compare the effects of market volatilities on Sleep Number and Ethan Allen 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 Ethan Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and Ethan Allen.
Diversification Opportunities for Sleep Number and Ethan Allen
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sleep and Ethan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Ethan Allen Interiors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethan Allen Interiors 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 Ethan Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethan Allen Interiors has no effect on the direction of Sleep Number i.e., Sleep Number and Ethan Allen go up and down completely randomly.
Pair Corralation between Sleep Number and Ethan Allen
Given the investment horizon of 90 days Sleep Number Corp is expected to generate 3.31 times more return on investment than Ethan Allen. However, Sleep Number is 3.31 times more volatile than Ethan Allen Interiors. It trades about 0.13 of its potential returns per unit of risk. Ethan Allen Interiors is currently generating about 0.15 per unit of risk. If you would invest 1,323 in Sleep Number Corp on August 31, 2024 and sell it today you would earn a total of 193.00 from holding Sleep Number Corp or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sleep Number Corp vs. Ethan Allen Interiors
Performance |
| Timeline |
| Sleep Number Corp |
| Ethan Allen Interiors |
Sleep Number and Ethan Allen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sleep Number and Ethan Allen
The main advantage of trading using opposite Sleep Number and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sleep Number position performs unexpectedly, Ethan Allen 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 Ethan Allen will offset losses from the drop in Ethan Allen's long position.| Sleep Number vs. Viomi Technology ADR | Sleep Number vs. Energy Focu | Sleep Number vs. Flexsteel Industries | Sleep Number vs. Ethan Allen Interiors |
| Ethan Allen vs. Viomi Technology ADR | Ethan Allen vs. Energy Focu | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. FGI 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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