Correlation Between Heidelberg Materials and WHIRLPOOL
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials 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 Heidelberg Materials and WHIRLPOOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and WHIRLPOOL, you can compare the effects of market volatilities on Heidelberg Materials 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 Heidelberg Materials with a short position of WHIRLPOOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and WHIRLPOOL.
Diversification Opportunities for Heidelberg Materials and WHIRLPOOL
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heidelberg and WHIRLPOOL is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and WHIRLPOOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHIRLPOOL and Heidelberg Materials 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 Heidelberg Materials AG 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 Heidelberg Materials i.e., Heidelberg Materials and WHIRLPOOL go up and down completely randomly.
Pair Corralation between Heidelberg Materials and WHIRLPOOL
Assuming the 90 days horizon Heidelberg Materials is expected to generate 2.96 times less return on investment than WHIRLPOOL. But when comparing it to its historical volatility, Heidelberg Materials AG is 3.12 times less risky than WHIRLPOOL. It trades about 0.27 of its potential returns per unit of risk. WHIRLPOOL is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 10,212 in WHIRLPOOL on September 13, 2024 and sell it today you would earn a total of 1,723 from holding WHIRLPOOL or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. WHIRLPOOL
Performance |
| Timeline |
| Heidelberg Materials |
| WHIRLPOOL |
Heidelberg Materials and WHIRLPOOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and WHIRLPOOL
The main advantage of trading using opposite Heidelberg Materials and WHIRLPOOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials 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.| Heidelberg Materials vs. Superior Plus Corp | Heidelberg Materials vs. NMI Holdings | Heidelberg Materials vs. SIVERS SEMICONDUCTORS AB | Heidelberg Materials vs. NorAm Drilling AS |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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