Correlation Between Tempur Sealy and American Woodmark
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy and American Woodmark 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 Tempur Sealy and American Woodmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tempur Sealy International and American Woodmark, you can compare the effects of market volatilities on Tempur Sealy and American Woodmark 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 Tempur Sealy with a short position of American Woodmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and American Woodmark.
Diversification Opportunities for Tempur Sealy and American Woodmark
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tempur and American is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and American Woodmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Woodmark and Tempur Sealy 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 Tempur Sealy International are associated (or correlated) with American Woodmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Woodmark has no effect on the direction of Tempur Sealy i.e., Tempur Sealy and American Woodmark go up and down completely randomly.
Pair Corralation between Tempur Sealy and American Woodmark
Assuming the 90 days horizon Tempur Sealy International is expected to generate 1.02 times more return on investment than American Woodmark. However, Tempur Sealy is 1.02 times more volatile than American Woodmark. It trades about 0.2 of its potential returns per unit of risk. American Woodmark is currently generating about -0.03 per unit of risk. If you would invest 5,400 in Tempur Sealy International on November 2, 2024 and sell it today you would earn a total of 350.00 from holding Tempur Sealy International or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tempur Sealy International vs. American Woodmark
Performance |
| Timeline |
| Tempur Sealy Interna |
| American Woodmark |
Tempur Sealy and American Woodmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and American Woodmark
The main advantage of trading using opposite Tempur Sealy and American Woodmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy position performs unexpectedly, American Woodmark 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 American Woodmark will offset losses from the drop in American Woodmark's long position.| Tempur Sealy vs. Superior Plus Corp | Tempur Sealy vs. Origin Agritech | Tempur Sealy vs. Identiv | Tempur Sealy vs. INTUITIVE SURGICAL |
| American Woodmark vs. GOODYEAR T RUBBER | American Woodmark vs. NXP Semiconductors NV | American Woodmark vs. EAGLE MATERIALS | American Woodmark vs. Mitsubishi Materials |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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