Correlation Between Hooker Furniture and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture 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 Hooker Furniture and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Whirlpool, you can compare the effects of market volatilities on Hooker Furniture 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 Hooker Furniture with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Whirlpool.
Diversification Opportunities for Hooker Furniture and Whirlpool
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hooker and Whirlpool is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture i.e., Hooker Furniture and Whirlpool go up and down completely randomly.
Pair Corralation between Hooker Furniture and Whirlpool
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.75 times more return on investment than Whirlpool. However, Hooker Furniture is 1.75 times more volatile than Whirlpool. It trades about 0.15 of its potential returns per unit of risk. Whirlpool is currently generating about 0.23 per unit of risk. If you would invest 1,684 in Hooker Furniture on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Hooker Furniture or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Whirlpool
Performance |
| Timeline |
| Hooker Furniture |
| Whirlpool |
Hooker Furniture and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Whirlpool
The main advantage of trading using opposite Hooker Furniture and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture 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.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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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