Correlation Between Tempur Sealy and Yokohama Rubber

Can any of the company-specific risk be diversified away by investing in both Tempur Sealy and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on Tempur Sealy and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and Yokohama Rubber.

Diversification Opportunities for Tempur Sealy and Yokohama Rubber

0.0

Correlation Coefficient

Tempur Sealy  Yokohama Rubber

Pay attention - limited upside

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

Pair Corralation between Tempur Sealy and Yokohama Rubber

If you would invest  1,970  in The Yokohama Rubber on October 10, 2024 and sell it today you would earn a total of  90.00  from holding The Yokohama Rubber or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tempur Sealy International  vs.  The Yokohama Rubber

Tempur Sealy Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempur Sealy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tempur Sealy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Yokohama Rubber

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Yokohama Rubber is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tempur Sealy and Yokohama Rubber

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

The idea behind Tempur Sealy International and The Yokohama Rubber 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.