Correlation Between Mohawk Industries and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries and Haier Smart 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 Mohawk Industries and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and Haier Smart Home, you can compare the effects of market volatilities on Mohawk Industries and Haier Smart 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 Mohawk Industries with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and Haier Smart.
Diversification Opportunities for Mohawk Industries and Haier Smart
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mohawk and Haier is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and Mohawk Industries 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 Mohawk Industries are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Mohawk Industries i.e., Mohawk Industries and Haier Smart go up and down completely randomly.
Pair Corralation between Mohawk Industries and Haier Smart
Considering the 90-day investment horizon Mohawk Industries is expected to generate 0.3 times more return on investment than Haier Smart. However, Mohawk Industries is 3.38 times less risky than Haier Smart. It trades about -0.13 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.05 per unit of risk. If you would invest 15,520 in Mohawk Industries on September 5, 2024 and sell it today you would lose (2,398) from holding Mohawk Industries or give up 15.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mohawk Industries vs. Haier Smart Home
Performance |
| Timeline |
| Mohawk Industries |
| Haier Smart Home |
Mohawk Industries and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and Haier Smart
The main advantage of trading using opposite Mohawk Industries and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Mohawk Industries vs. Flexsteel Industries | Mohawk Industries vs. Crown Crafts | Mohawk Industries vs. MasterBrand | Mohawk Industries vs. MillerKnoll |
| Haier Smart vs. FGI Industries | Haier Smart vs. Viomi Technology ADR | Haier Smart vs. Traeger | Haier Smart vs. Mohawk Industries |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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