Correlation Between Tempur Sealy and FirsTime Design
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy and FirsTime Design 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 FirsTime Design 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 FirsTime Design, you can compare the effects of market volatilities on Tempur Sealy and FirsTime Design 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 FirsTime Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and FirsTime Design.
Diversification Opportunities for Tempur Sealy and FirsTime Design
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tempur and FirsTime is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and FirsTime Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirsTime Design 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 FirsTime Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirsTime Design has no effect on the direction of Tempur Sealy i.e., Tempur Sealy and FirsTime Design go up and down completely randomly.
Pair Corralation between Tempur Sealy and FirsTime Design
Considering the 90-day investment horizon Tempur Sealy International is expected to generate 0.17 times more return on investment than FirsTime Design. However, Tempur Sealy International is 5.85 times less risky than FirsTime Design. It trades about 0.05 of its potential returns per unit of risk. FirsTime Design is currently generating about -0.02 per unit of risk. If you would invest 3,884 in Tempur Sealy International on October 21, 2024 and sell it today you would earn a total of 2,076 from holding Tempur Sealy International or generate 53.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tempur Sealy International vs. FirsTime Design
Performance |
| Timeline |
| Tempur Sealy Interna |
| FirsTime Design |
Tempur Sealy and FirsTime Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and FirsTime Design
The main advantage of trading using opposite Tempur Sealy and FirsTime Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy position performs unexpectedly, FirsTime Design 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 FirsTime Design will offset losses from the drop in FirsTime Design's long position.| Tempur Sealy vs. La Z Boy Incorporated | Tempur Sealy vs. Purple Innovation | Tempur Sealy vs. MasterBrand | Tempur Sealy vs. Ethan Allen Interiors |
| FirsTime Design vs. Sleep Number Corp | FirsTime Design vs. The Lovesac | FirsTime Design vs. Tempur Sealy International | FirsTime Design 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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