Correlation Between Whirlpool and Selective Insurance

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

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

Diversification Opportunities for Whirlpool and Selective Insurance

0.0

Correlation Coefficient

Whirlpool  Selective Insurance

Pay attention - limited upside

The 3 months correlation between Whirlpool and Selective is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Whirlpool 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 Whirlpool are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Whirlpool i.e., Whirlpool and Selective Insurance go up and down completely randomly.

Pair Corralation between Whirlpool and Selective Insurance

If you would invest  8,610  in Selective Insurance Group on December 29, 2024 and sell it today you would lose (260.00) from holding Selective Insurance Group or give up 3.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Whirlpool  vs.  Selective Insurance Group

Whirlpool

Risk-Adjusted Performance

Very Weak

Over the last 90 days Whirlpool has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Whirlpool is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Selective Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selective Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Selective Insurance is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Whirlpool and Selective Insurance

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

The idea behind Whirlpool and Selective Insurance Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.