Correlation Between Sleep Number and Natuzzi SpA
Can any of the company-specific risk be diversified away by investing in both Sleep Number and Natuzzi SpA 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 Natuzzi SpA 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 Natuzzi SpA, you can compare the effects of market volatilities on Sleep Number and Natuzzi SpA 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 Natuzzi SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and Natuzzi SpA.
Diversification Opportunities for Sleep Number and Natuzzi SpA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sleep and Natuzzi is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Natuzzi SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natuzzi SpA 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 Natuzzi SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natuzzi SpA has no effect on the direction of Sleep Number i.e., Sleep Number and Natuzzi SpA go up and down completely randomly.
Pair Corralation between Sleep Number and Natuzzi SpA
Given the investment horizon of 90 days Sleep Number is expected to generate 85.35 times less return on investment than Natuzzi SpA. But when comparing it to its historical volatility, Sleep Number Corp is 8.98 times less risky than Natuzzi SpA. It trades about 0.0 of its potential returns per unit of risk. Natuzzi SpA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Natuzzi SpA on October 24, 2024 and sell it today you would lose (205.00) from holding Natuzzi SpA or give up 29.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.64% |
| Values | Daily Returns |
Sleep Number Corp vs. Natuzzi SpA
Performance |
| Timeline |
| Sleep Number Corp |
| Natuzzi SpA |
Sleep Number and Natuzzi SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sleep Number and Natuzzi SpA
The main advantage of trading using opposite Sleep Number and Natuzzi SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sleep Number position performs unexpectedly, Natuzzi SpA 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 Natuzzi SpA will offset losses from the drop in Natuzzi SpA's long position.| Sleep Number vs. Purple Innovation | Sleep Number vs. Mohawk Industries | Sleep Number vs. La Z Boy Incorporated | Sleep Number vs. Leggett Platt Incorporated |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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