Correlation Between Sleep Number and Traeger

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

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

Diversification Opportunities for Sleep Number and Traeger

0.92

Correlation Coefficient

Sleep Number  Traeger

Almost no diversification

The 3 months correlation between Sleep and Traeger is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Traeger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traeger and Sleep Number 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 Sleep Number Corp are associated (or correlated) with Traeger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traeger has no effect on the direction of Sleep Number i.e., Sleep Number and Traeger go up and down completely randomly.

Pair Corralation between Sleep Number and Traeger

Given the investment horizon of 90 days Sleep Number Corp is expected to under-perform the Traeger. In addition to that, Sleep Number is 2.59 times more volatile than Traeger. It trades about -0.13 of its total potential returns per unit of risk. Traeger is currently generating about -0.16 per unit of volatility. If you would invest  234.00  in Traeger on December 28, 2024 and sell it today you would lose (63.00) from holding Traeger or give up 26.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Sleep Number Corp  vs.  Traeger

Sleep Number Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sleep Number Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Traeger

Risk-Adjusted Performance

Very Weak

Over the last 90 days Traeger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sleep Number and Traeger

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

The idea behind Sleep Number Corp and Traeger 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.