Correlation Between KAUFMAN ET and WHIRLPOOL
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and WHIRLPOOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and WHIRLPOOL, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of WHIRLPOOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and WHIRLPOOL.
Diversification Opportunities for KAUFMAN ET and WHIRLPOOL
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAUFMAN and WHIRLPOOL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and WHIRLPOOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHIRLPOOL and KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and WHIRLPOOL go up and down completely randomly.
Pair Corralation between KAUFMAN ET and WHIRLPOOL
Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 50.32 times less return on investment than WHIRLPOOL. But when comparing it to its historical volatility, KAUFMAN ET BROAD is 1.42 times less risky than WHIRLPOOL. It trades about 0.01 of its potential returns per unit of risk. WHIRLPOOL is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,376 in WHIRLPOOL on September 12, 2024 and sell it today you would earn a total of 3,559 from holding WHIRLPOOL or generate 42.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. WHIRLPOOL
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| WHIRLPOOL |
KAUFMAN ET and WHIRLPOOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and WHIRLPOOL
The main advantage of trading using opposite KAUFMAN ET and WHIRLPOOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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 KAUFMAN ET BROAD 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.| WHIRLPOOL vs. Eidesvik Offshore ASA | WHIRLPOOL vs. Thai Beverage Public | WHIRLPOOL vs. SOLSTAD OFFSHORE NK | WHIRLPOOL vs. CAL MAINE FOODS |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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