Correlation Between Tempur Sealy and Traeger

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

Diversification Opportunities for Tempur Sealy and Traeger

0.12

Correlation Coefficient

Tempur Sealy  Traeger

Average diversification

The 3 months correlation between Tempur and Traeger is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and Traeger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traeger 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 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 Tempur Sealy i.e., Tempur Sealy and Traeger go up and down completely randomly.

Pair Corralation between Tempur Sealy and Traeger

Considering the 90-day investment horizon Tempur Sealy is expected to generate 2.49 times less return on investment than Traeger. But when comparing it to its historical volatility, Tempur Sealy International is 2.2 times less risky than Traeger. It trades about 0.06 of its potential returns per unit of risk. Traeger is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Traeger on September 5, 2024 and sell it today you would earn a total of  86.00  from holding Traeger or generate 34.4% return on investment over 90 days.

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

Tempur Sealy International  vs.  Traeger

Tempur Sealy Interna

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tempur Sealy International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tempur Sealy showed solid returns over the last few months and may actually be approaching a breakup point.

Traeger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Traeger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Traeger is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tempur Sealy and Traeger

The main advantage of trading using opposite Tempur Sealy and Traeger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy 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 Tempur Sealy International 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.