Correlation Between Tempur Sealy and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy 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 Tempur Sealy and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tempur Sealy International and Whirlpool, you can compare the effects of market volatilities on Tempur Sealy 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 Tempur Sealy with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and Whirlpool.
Diversification Opportunities for Tempur Sealy and Whirlpool
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tempur and Whirlpool is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Tempur Sealy 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 Tempur Sealy International 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 Tempur Sealy i.e., Tempur Sealy and Whirlpool go up and down completely randomly.
Pair Corralation between Tempur Sealy and Whirlpool
Assuming the 90 days horizon Tempur Sealy is expected to generate 1.22 times less return on investment than Whirlpool. But when comparing it to its historical volatility, Tempur Sealy International is 1.37 times less risky than Whirlpool. It trades about 0.38 of its potential returns per unit of risk. Whirlpool is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 11,080 in Whirlpool on October 20, 2024 and sell it today you would earn a total of 1,385 from holding Whirlpool or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Tempur Sealy International vs. Whirlpool
Performance |
| Timeline |
| Tempur Sealy Interna |
| Whirlpool |
Tempur Sealy and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and Whirlpool
The main advantage of trading using opposite Tempur Sealy and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy 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.| Tempur Sealy vs. Fortune Brands Home | Tempur Sealy vs. Whirlpool | Tempur Sealy vs. Howden Joinery Group | Tempur Sealy vs. Leggett Platt Incorporated |
| Whirlpool vs. Stag Industrial | Whirlpool vs. FIREWEED METALS P | Whirlpool vs. UNIQA INSURANCE GR | Whirlpool vs. Ultra Clean Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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