Correlation Between Dentsply Sirona and Whirlpool

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

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

Diversification Opportunities for Dentsply Sirona and Whirlpool

-0.73

Correlation Coefficient

Dentsply Sirona  Whirlpool

Pay attention - limited upside

The 3 months correlation between Dentsply and Whirlpool is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and Whirlpool go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Whirlpool

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the Whirlpool. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 1.89 times less risky than Whirlpool. The stock trades about -0.04 of its potential returns per unit of risk. The Whirlpool is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10,660  in Whirlpool on October 8, 2024 and sell it today you would earn a total of  440.00  from holding Whirlpool or generate 4.13% return on investment over 90 days.

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

Dentsply Sirona  vs.  Whirlpool

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Whirlpool

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Whirlpool are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and Whirlpool

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

The idea behind Dentsply Sirona and Whirlpool 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..