Correlation Between Natuzzi SpA and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Natuzzi SpA 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 Natuzzi SpA and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natuzzi SpA and Whirlpool, you can compare the effects of market volatilities on Natuzzi SpA 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 Natuzzi SpA with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natuzzi SpA and Whirlpool.
Diversification Opportunities for Natuzzi SpA and Whirlpool
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natuzzi and Whirlpool is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Natuzzi SpA and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Natuzzi SpA 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 Natuzzi SpA 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 Natuzzi SpA i.e., Natuzzi SpA and Whirlpool go up and down completely randomly.
Pair Corralation between Natuzzi SpA and Whirlpool
Considering the 90-day investment horizon Natuzzi SpA is expected to generate 1.8 times more return on investment than Whirlpool. However, Natuzzi SpA is 1.8 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 430.00 in Natuzzi SpA on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Natuzzi SpA or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Natuzzi SpA vs. Whirlpool
Performance |
| Timeline |
| Natuzzi SpA |
| Whirlpool |
Natuzzi SpA and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natuzzi SpA and Whirlpool
The main advantage of trading using opposite Natuzzi SpA and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natuzzi SpA 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.| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
| 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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