Correlation Between Whirlpool and Flexsteel Industries

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

By analyzing existing cross correlation between Whirlpool and Flexsteel Industries, you can compare the effects of market volatilities on Whirlpool and Flexsteel Industries 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 Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Flexsteel Industries.

Diversification Opportunities for Whirlpool and Flexsteel Industries

0.57

Correlation Coefficient

Whirlpool  Flexsteel Industries

Very weak diversification

The 3 months correlation between Whirlpool and Flexsteel is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries 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 Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Whirlpool i.e., Whirlpool and Flexsteel Industries go up and down completely randomly.

Pair Corralation between Whirlpool and Flexsteel Industries

Considering the 90-day investment horizon Whirlpool is expected to generate 0.63 times more return on investment than Flexsteel Industries. However, Whirlpool is 1.6 times less risky than Flexsteel Industries. It trades about -0.1 of its potential returns per unit of risk. Flexsteel Industries is currently generating about -0.1 per unit of risk. If you would invest  11,190  in Whirlpool on December 30, 2024 and sell it today you would lose (2,239) from holding Whirlpool or give up 20.01% of portfolio value over 90 days.

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

Whirlpool  vs.  Flexsteel Industries

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. Even with unsteady performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Flexsteel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flexsteel Industries 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Whirlpool and Flexsteel Industries

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

The idea behind Whirlpool and Flexsteel Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..