Correlation Between MasterBrand and Whirlpool
Can any of the company-specific risk be diversified away by investing in both MasterBrand 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 MasterBrand and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MasterBrand and Whirlpool, you can compare the effects of market volatilities on MasterBrand 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 MasterBrand with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of MasterBrand and Whirlpool.
Diversification Opportunities for MasterBrand and Whirlpool
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MasterBrand and Whirlpool is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and MasterBrand 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 MasterBrand 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 MasterBrand i.e., MasterBrand and Whirlpool go up and down completely randomly.
Pair Corralation between MasterBrand and Whirlpool
Considering the 90-day investment horizon MasterBrand is expected to generate 0.37 times more return on investment than Whirlpool. However, MasterBrand is 2.71 times less risky than Whirlpool. It trades about 0.6 of its potential returns per unit of risk. Whirlpool is currently generating about -0.05 per unit of risk. If you would invest 1,459 in MasterBrand on November 2, 2024 and sell it today you would earn a total of 281.00 from holding MasterBrand or generate 19.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MasterBrand vs. Whirlpool
Performance |
| Timeline |
| MasterBrand |
| Whirlpool |
MasterBrand and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MasterBrand and Whirlpool
The main advantage of trading using opposite MasterBrand and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasterBrand 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.| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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