Correlation Between Charter Communications and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Whirlpool, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Whirlpool.
Diversification Opportunities for Charter Communications and Whirlpool
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Whirlpool is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Whirlpool go up and down completely randomly.
Pair Corralation between Charter Communications and Whirlpool
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.02 times more return on investment than Whirlpool. However, Charter Communications is 1.02 times more volatile than Whirlpool. It trades about 0.01 of its potential returns per unit of risk. Whirlpool is currently generating about 0.01 per unit of risk. If you would invest 35,500 in Charter Communications on October 11, 2024 and sell it today you would lose (1,905) from holding Charter Communications or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Whirlpool
Performance |
| Timeline |
| Charter Communications |
| Whirlpool |
Charter Communications and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Whirlpool
The main advantage of trading using opposite Charter Communications and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Hua Hong Semiconductor | Charter Communications vs. Elmos Semiconductor SE | Charter Communications vs. MagnaChip Semiconductor Corp | Charter Communications vs. JLF INVESTMENT |
| Whirlpool vs. Highlight Communications AG | Whirlpool vs. Charter Communications | Whirlpool vs. FIH MOBILE | Whirlpool vs. INTERSHOP Communications Aktiengesellschaft |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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