Correlation Between Sleep Number and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Sleep Number and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on Sleep Number and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and Whirlpool.
Diversification Opportunities for Sleep Number and Whirlpool
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sleep and Whirlpool is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Sleep Number i.e., Sleep Number and Whirlpool go up and down completely randomly.
Pair Corralation between Sleep Number and Whirlpool
Given the investment horizon of 90 days Sleep Number Corp is expected to generate 0.8 times more return on investment than Whirlpool. However, Sleep Number Corp is 1.25 times less risky than Whirlpool. It trades about 0.3 of its potential returns per unit of risk. Whirlpool is currently generating about -0.05 per unit of risk. If you would invest 1,495 in Sleep Number Corp on November 2, 2024 and sell it today you would earn a total of 304.00 from holding Sleep Number Corp or generate 20.33% 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. Whirlpool
Performance |
| Timeline |
| Sleep Number Corp |
| Whirlpool |
Sleep Number and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sleep Number and Whirlpool
The main advantage of trading using opposite Sleep Number and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sleep Number position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool'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 |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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