Correlation Between Whirlpool and Whirlpool

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

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

Diversification Opportunities for Whirlpool and Whirlpool

0.47

Correlation Coefficient

Whirlpool  Whirlpool

Very weak diversification

The 3 months correlation between Whirlpool and Whirlpool is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool SA and Whirlpool SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool SA 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 SA 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 SA has no effect on the direction of Whirlpool i.e., Whirlpool and Whirlpool go up and down completely randomly.

Pair Corralation between Whirlpool and Whirlpool

Assuming the 90 days trading horizon Whirlpool SA is expected to generate 0.76 times more return on investment than Whirlpool. However, Whirlpool SA is 1.32 times less risky than Whirlpool. It trades about 0.04 of its potential returns per unit of risk. Whirlpool SA is currently generating about 0.02 per unit of risk. If you would invest  425.00  in Whirlpool SA on December 31, 2024 and sell it today you would earn a total of  11.00  from holding Whirlpool SA or generate 2.59% return on investment over 90 days.

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

Whirlpool SA  vs.  Whirlpool SA

Whirlpool SA

Risk-Adjusted Performance

Insignificant

Over the last 90 days Whirlpool SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Whirlpool is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Whirlpool SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Whirlpool SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Whirlpool is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Whirlpool and Whirlpool

The main advantage of trading using opposite Whirlpool and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool 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 Whirlpool SA and Whirlpool SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.