Correlation Between Leggett Platt and Whirlpool

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

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

Diversification Opportunities for Leggett Platt and Whirlpool

-0.54

Correlation Coefficient

Leggett Platt  Whirlpool

Excellent diversification

The 3 months correlation between Leggett and Whirlpool is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Leggett Platt 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 Leggett Platt Incorporated 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 Leggett Platt i.e., Leggett Platt and Whirlpool go up and down completely randomly.

Pair Corralation between Leggett Platt and Whirlpool

Assuming the 90 days horizon Leggett Platt Incorporated is expected to under-perform the Whirlpool. In addition to that, Leggett Platt is 1.28 times more volatile than Whirlpool. It trades about -0.15 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.12 per unit of volatility. If you would invest  9,412  in Whirlpool on September 28, 2024 and sell it today you would earn a total of  1,558  from holding Whirlpool or generate 16.55% return on investment over 90 days.

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

Leggett Platt Incorporated  vs.  Whirlpool

Leggett Platt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leggett Platt Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Whirlpool

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Whirlpool are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leggett Platt and Whirlpool

The main advantage of trading using opposite Leggett Platt and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt 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 Leggett Platt Incorporated 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.