Correlation Between Whirlpool and Lifetime Brands

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

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

Diversification Opportunities for Whirlpool and Lifetime Brands

0.75

Correlation Coefficient

Whirlpool  Lifetime Brands

Poor diversification

The 3 months correlation between Whirlpool and Lifetime is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Lifetime Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifetime Brands 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 Lifetime Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifetime Brands has no effect on the direction of Whirlpool i.e., Whirlpool and Lifetime Brands go up and down completely randomly.

Pair Corralation between Whirlpool and Lifetime Brands

Considering the 90-day investment horizon Whirlpool is expected to under-perform the Lifetime Brands. But the stock apears to be less risky and, when comparing its historical volatility, Whirlpool is 1.11 times less risky than Lifetime Brands. The stock trades about -0.1 of its potential returns per unit of risk. The Lifetime Brands is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  554.00  in Lifetime Brands on December 30, 2024 and sell it today you would lose (61.00) from holding Lifetime Brands or give up 11.01% of portfolio value over 90 days.

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

Whirlpool  vs.  Lifetime Brands

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.

Lifetime Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifetime Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Whirlpool and Lifetime Brands

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

The idea behind Whirlpool and Lifetime Brands 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.