Correlation Between SEB SA and Sleep Number

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

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

Diversification Opportunities for SEB SA and Sleep Number

0.77

Correlation Coefficient

SEB SA  Sleep Number

Poor diversification

The 3 months correlation between SEB and Sleep is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA 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 SEB SA 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 SEB SA 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 SEB SA i.e., SEB SA and Sleep Number go up and down completely randomly.

Pair Corralation between SEB SA and Sleep Number

Assuming the 90 days horizon SEB SA is expected to generate 4.69 times less return on investment than Sleep Number. But when comparing it to its historical volatility, SEB SA is 3.45 times less risky than Sleep Number. It trades about 0.08 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  464.00  in Sleep Number Corp on April 22, 2025 and sell it today you would earn a total of  161.00  from holding Sleep Number Corp or generate 34.7% return on investment over 90 days.

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

SEB SA  vs.  Sleep Number Corp

SEB SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SEB SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Sleep Number Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sleep Number Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEB SA and Sleep Number

The main advantage of trading using opposite SEB SA and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA 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 SEB SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.