Correlation Between Mohawk Industries and ELECTROLUX
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries and ELECTROLUX 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 ELECTROLUX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and ELECTROLUX B ADR2, you can compare the effects of market volatilities on Mohawk Industries and ELECTROLUX 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 ELECTROLUX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and ELECTROLUX.
Diversification Opportunities for Mohawk Industries and ELECTROLUX
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mohawk and ELECTROLUX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and ELECTROLUX B ADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTROLUX B ADR2 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 ELECTROLUX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTROLUX B ADR2 has no effect on the direction of Mohawk Industries i.e., Mohawk Industries and ELECTROLUX go up and down completely randomly.
Pair Corralation between Mohawk Industries and ELECTROLUX
Assuming the 90 days horizon Mohawk Industries is expected to generate 0.92 times more return on investment than ELECTROLUX. However, Mohawk Industries is 1.09 times less risky than ELECTROLUX. It trades about 0.08 of its potential returns per unit of risk. ELECTROLUX B ADR2 is currently generating about -0.02 per unit of risk. If you would invest 8,500 in Mohawk Industries on September 4, 2024 and sell it today you would earn a total of 4,500 from holding Mohawk Industries or generate 52.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Mohawk Industries vs. ELECTROLUX B ADR2
Performance |
| Timeline |
| Mohawk Industries |
| ELECTROLUX B ADR2 |
Mohawk Industries and ELECTROLUX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and ELECTROLUX
The main advantage of trading using opposite Mohawk Industries and ELECTROLUX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries position performs unexpectedly, ELECTROLUX 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 ELECTROLUX will offset losses from the drop in ELECTROLUX's long position.| Mohawk Industries vs. Chuangs China Investments | Mohawk Industries vs. REINET INVESTMENTS SCA | Mohawk Industries vs. Aluminum of | Mohawk Industries vs. New Residential Investment |
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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 Stocks Directory module to find actively traded stocks across global markets.
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