Correlation Between J Long and Sleep Number

Can any of the company-specific risk be diversified away by investing in both J Long and Sleep Number 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 J Long and Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between J Long Group Limited and Sleep Number Corp, you can compare the effects of market volatilities on J Long and Sleep Number 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 J Long with a short position of Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Long and Sleep Number.

Diversification Opportunities for J Long and Sleep Number

-0.29

Correlation Coefficient

J Long  Sleep Number

Very good diversification

The 3 months correlation between J Long and Sleep is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number Corp and J Long 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 J Long Group Limited are associated (or correlated) with Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of J Long i.e., J Long and Sleep Number go up and down completely randomly.

Pair Corralation between J Long and Sleep Number

Allowing for the 90-day total investment horizon J Long Group Limited is expected to generate 2.2 times more return on investment than Sleep Number. However, J Long is 2.2 times more volatile than Sleep Number Corp. It trades about 0.46 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.02 per unit of risk. If you would invest  304.00  in J Long Group Limited on October 24, 2024 and sell it today you would earn a total of  192.00  from holding J Long Group Limited or generate 63.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

J Long Group Limited  vs.  Sleep Number Corp

J Long Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sleep Number Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sleep Number Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Long and Sleep Number

The main advantage of trading using opposite J Long and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Long position performs unexpectedly, Sleep Number 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 Sleep Number will offset losses from the drop in Sleep Number's long position.

The idea behind J Long Group Limited and Sleep Number Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.