Correlation Between Whirlpool and Crown Crafts
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Crown Crafts 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 Crown Crafts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Crown Crafts, you can compare the effects of market volatilities on Whirlpool and Crown Crafts 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 Crown Crafts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Crown Crafts.
Diversification Opportunities for Whirlpool and Crown Crafts
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whirlpool and Crown is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Crown Crafts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Crafts 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 Crown Crafts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Crafts has no effect on the direction of Whirlpool i.e., Whirlpool and Crown Crafts go up and down completely randomly.
Pair Corralation between Whirlpool and Crown Crafts
Considering the 90-day investment horizon Whirlpool is expected to generate 1.22 times more return on investment than Crown Crafts. However, Whirlpool is 1.22 times more volatile than Crown Crafts. It trades about 0.44 of its potential returns per unit of risk. Crown Crafts is currently generating about -0.11 per unit of risk. If you would invest 10,212 in Whirlpool on August 28, 2024 and sell it today you would earn a total of 1,588 from holding Whirlpool or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Crown Crafts
Performance |
| Timeline |
| Whirlpool |
| Crown Crafts |
Whirlpool and Crown Crafts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Crown Crafts
The main advantage of trading using opposite Whirlpool and Crown Crafts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Crown Crafts 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 Crown Crafts will offset losses from the drop in Crown Crafts' long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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