Correlation Between Sleep Number and Ollies Bargain

Can any of the company-specific risk be diversified away by investing in both Sleep Number and Ollies Bargain 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 Ollies Bargain 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 Ollies Bargain Outlet, you can compare the effects of market volatilities on Sleep Number and Ollies Bargain 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 Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sleep Number and Ollies Bargain.

Diversification Opportunities for Sleep Number and Ollies Bargain

0.34

Correlation Coefficient

Sleep Number  Ollies Bargain

Weak diversification

The 3 months correlation between Sleep and Ollies is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet 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 Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of Sleep Number i.e., Sleep Number and Ollies Bargain go up and down completely randomly.

Pair Corralation between Sleep Number and Ollies Bargain

Given the investment horizon of 90 days Sleep Number Corp is expected to under-perform the Ollies Bargain. In addition to that, Sleep Number is 2.7 times more volatile than Ollies Bargain Outlet. It trades about -0.14 of its total potential returns per unit of risk. Ollies Bargain Outlet is currently generating about 0.03 per unit of volatility. If you would invest  11,051  in Ollies Bargain Outlet on December 28, 2024 and sell it today you would earn a total of  273.00  from holding Ollies Bargain Outlet or generate 2.47% return on investment over 90 days.

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

Sleep Number Corp  vs.  Ollies Bargain Outlet

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.

Ollies Bargain Outlet

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ollies Bargain Outlet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Ollies Bargain is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sleep Number and Ollies Bargain

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

The idea behind Sleep Number Corp and Ollies Bargain Outlet 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.