Correlation Between Select Comfort and Libbey

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Can any of the company-specific risk be diversified away by investing in both Select Comfort and Libbey 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 Select Comfort and Libbey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Comfort Corp and Libbey Inc, you can compare the effects of market volatilities on Select Comfort and Libbey 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 Select Comfort with a short position of Libbey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Comfort and Libbey.

Diversification Opportunities for Select Comfort and Libbey

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Select and Libbey is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Select Comfort Corp and Libbey Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libbey Inc and Select Comfort 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 Select Comfort Corp are associated (or correlated) with Libbey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libbey Inc has no effect on the direction of Select Comfort i.e., Select Comfort and Libbey go up and down completely randomly.

Pair Corralation between Select Comfort and Libbey

If you would invest (100.00) in Libbey Inc on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Libbey Inc or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Select Comfort Corp  vs.  Libbey Inc

 Performance 
       Timeline  
Select Comfort Corp 

Risk-Adjusted Performance

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Over the last 90 days Select Comfort Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Select Comfort is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Libbey Inc 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Libbey Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Libbey is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Select Comfort and Libbey Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Select Comfort and Libbey

The main advantage of trading using opposite Select Comfort and Libbey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Comfort position performs unexpectedly, Libbey 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 Libbey will offset losses from the drop in Libbey's long position.
The idea behind Select Comfort Corp and Libbey Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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