Correlation Between Whirlpool and MUTUIONLINE

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

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

Diversification Opportunities for Whirlpool and MUTUIONLINE

0.89

Correlation Coefficient

Whirlpool  MUTUIONLINE

Very poor diversification

The 3 months correlation between Whirlpool and MUTUIONLINE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of Whirlpool i.e., Whirlpool and MUTUIONLINE go up and down completely randomly.

Pair Corralation between Whirlpool and MUTUIONLINE

Assuming the 90 days horizon Whirlpool is expected to generate 1.22 times more return on investment than MUTUIONLINE. However, Whirlpool is 1.22 times more volatile than MUTUIONLINE. It trades about 0.12 of its potential returns per unit of risk. MUTUIONLINE is currently generating about 0.12 per unit of risk. If you would invest  9,329  in Whirlpool on September 27, 2024 and sell it today you would earn a total of  1,641  from holding Whirlpool or generate 17.59% return on investment over 90 days.

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

Whirlpool  vs.  MUTUIONLINE

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 unsteady basic indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

MUTUIONLINE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MUTUIONLINE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, MUTUIONLINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Whirlpool and MUTUIONLINE

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

The idea behind Whirlpool and MUTUIONLINE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .