Correlation Between Sleep Number and Haier Smart

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

Diversification Opportunities for Sleep Number and Haier Smart

0.52

Correlation Coefficient

Sleep Number  Haier Smart

Very weak diversification

The 3 months correlation between Sleep and Haier is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sleep Number Corp and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Sleep Number i.e., Sleep Number and Haier Smart go up and down completely randomly.

Pair Corralation between Sleep Number and Haier Smart

Assuming the 90 days horizon Sleep Number Corp is expected to generate 4.07 times more return on investment than Haier Smart. However, Sleep Number is 4.07 times more volatile than Haier Smart Home. It trades about 0.06 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.2 per unit of risk. If you would invest  585.00  in Sleep Number Corp on April 25, 2025 and sell it today you would earn a total of  80.00  from holding Sleep Number Corp or generate 13.68% return on investment over 90 days.

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

Sleep Number Corp  vs.  Haier Smart Home

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 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Haier Smart Home

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Haier Smart exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sleep Number and Haier Smart

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

The idea behind Sleep Number Corp and Haier Smart Home 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.