Correlation Between Whirlpool and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Aptiv PLC 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 Whirlpool and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Aptiv PLC, you can compare the effects of market volatilities on Whirlpool and Aptiv PLC 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 Whirlpool with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Aptiv PLC.
Diversification Opportunities for Whirlpool and Aptiv PLC
Excellent diversification
The 3 months correlation between Whirlpool and Aptiv is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Whirlpool 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 Whirlpool are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Whirlpool i.e., Whirlpool and Aptiv PLC go up and down completely randomly.
Pair Corralation between Whirlpool and Aptiv PLC
Considering the 90-day investment horizon Whirlpool is expected to generate 1.02 times more return on investment than Aptiv PLC. However, Whirlpool is 1.02 times more volatile than Aptiv PLC. It trades about 0.01 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.04 per unit of risk. If you would invest 12,632 in Whirlpool on August 28, 2024 and sell it today you would lose (832.00) from holding Whirlpool or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Aptiv PLC
Performance |
| Timeline |
| Whirlpool |
| Aptiv PLC |
Whirlpool and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Aptiv PLC
The main advantage of trading using opposite Whirlpool and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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