Correlation Between Lands End and Whirlpool

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

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

Diversification Opportunities for Lands End and Whirlpool

-0.72

Correlation Coefficient

Lands End  Whirlpool

Pay attention - limited upside

The 3 months correlation between Lands and Whirlpool is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Lands End 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 Lands End 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 Lands End i.e., Lands End and Whirlpool go up and down completely randomly.

Pair Corralation between Lands End and Whirlpool

Allowing for the 90-day total investment horizon Lands End is expected to under-perform the Whirlpool. In addition to that, Lands End is 1.16 times more volatile than Whirlpool. It trades about -0.01 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.4 per unit of volatility. If you would invest  11,573  in Whirlpool on October 24, 2024 and sell it today you would earn a total of  1,428  from holding Whirlpool or generate 12.34% return on investment over 90 days.

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

Lands End  vs.  Whirlpool

Lands End

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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. Even with relatively unsteady technical indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lands End and Whirlpool

The main advantage of trading using opposite Lands End and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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 Lands End 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.