Correlation Between Tempur Sealy and Global X
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy and Global X 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 Global X 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 Global X Video, you can compare the effects of market volatilities on Tempur Sealy and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and Global X.
Diversification Opportunities for Tempur Sealy and Global X
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tempur and Global is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and Global X Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Video 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Video has no effect on the direction of Tempur Sealy i.e., Tempur Sealy and Global X go up and down completely randomly.
Pair Corralation between Tempur Sealy and Global X
Considering the 90-day investment horizon Tempur Sealy International is expected to generate 1.32 times more return on investment than Global X. However, Tempur Sealy is 1.32 times more volatile than Global X Video. It trades about -0.07 of its potential returns per unit of risk. Global X Video is currently generating about -0.1 per unit of risk. If you would invest 5,192 in Tempur Sealy International on January 24, 2024 and sell it today you would lose (279.00) from holding Tempur Sealy International or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tempur Sealy International vs. Global X Video
Performance |
| Timeline |
| Tempur Sealy Interna |
| Global X Video |
Tempur Sealy and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and Global X
The main advantage of trading using opposite Tempur Sealy and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind Tempur Sealy International and Global X Video 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.| Global X vs. iShares Global Financials | Global X vs. iShares Global Tech | Global X vs. iShares Global Healthcare |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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