Correlation Between Dow Jones and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Whirlpool SA, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Whirlpool.
Diversification Opportunities for Dow Jones and Whirlpool
Very good diversification
The 3 months correlation between Dow and Whirlpool is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Whirlpool SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool SA and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Whirlpool go up and down completely randomly.
Pair Corralation between Dow Jones and Whirlpool
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.78 times more return on investment than Whirlpool. However, Dow Jones Industrial is 1.29 times less risky than Whirlpool. It trades about 0.27 of its potential returns per unit of risk. Whirlpool SA is currently generating about -0.14 per unit of risk. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.96% |
| Values | Daily Returns |
Dow Jones Industrial vs. Whirlpool SA
Performance |
| Timeline |
Dow Jones and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Whirlpool SA
Pair trading matchups for Whirlpool
Pair Trading with Dow Jones and Whirlpool
The main advantage of trading using opposite Dow Jones and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| Whirlpool vs. Whirlpool SA | Whirlpool vs. Indstrias Romi SA | Whirlpool vs. Schulz SA | Whirlpool vs. Marcopolo SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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