Correlation Between Whirlpool and Energy Focu
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Energy Focu 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 Energy Focu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Energy Focu, you can compare the effects of market volatilities on Whirlpool and Energy Focu 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 Energy Focu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Energy Focu.
Diversification Opportunities for Whirlpool and Energy Focu
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whirlpool and Energy is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Energy Focu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Focu 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 Energy Focu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Focu has no effect on the direction of Whirlpool i.e., Whirlpool and Energy Focu go up and down completely randomly.
Pair Corralation between Whirlpool and Energy Focu
Considering the 90-day investment horizon Whirlpool is expected to generate 1.31 times less return on investment than Energy Focu. But when comparing it to its historical volatility, Whirlpool is 2.93 times less risky than Energy Focu. It trades about 0.23 of its potential returns per unit of risk. Energy Focu is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 132.00 in Energy Focu on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Energy Focu or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Energy Focu
Performance |
| Timeline |
| Whirlpool |
| Energy Focu |
Whirlpool and Energy Focu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Energy Focu
The main advantage of trading using opposite Whirlpool and Energy Focu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Energy Focu 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 Energy Focu will offset losses from the drop in Energy Focu's long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| Energy Focu vs. Petros Pharmaceuticals | Energy Focu vs. Pioneer Power Solutions | Energy Focu vs. Ensysce Biosciences | Energy Focu vs. Aquagold International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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