Correlation Between Whirlpool and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Flexsteel Industries 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 Flexsteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Flexsteel Industries, you can compare the effects of market volatilities on Whirlpool and Flexsteel Industries 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 Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Flexsteel Industries.
Diversification Opportunities for Whirlpool and Flexsteel Industries
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whirlpool and Flexsteel is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries 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 Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Whirlpool i.e., Whirlpool and Flexsteel Industries go up and down completely randomly.
Pair Corralation between Whirlpool and Flexsteel Industries
Considering the 90-day investment horizon Whirlpool is expected to generate 78.91 times less return on investment than Flexsteel Industries. But when comparing it to its historical volatility, Whirlpool is 1.51 times less risky than Flexsteel Industries. It trades about 0.0 of its potential returns per unit of risk. Flexsteel Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,423 in Flexsteel Industries on August 27, 2024 and sell it today you would earn a total of 4,548 from holding Flexsteel Industries or generate 319.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Flexsteel Industries
Performance |
| Timeline |
| Whirlpool |
| Flexsteel Industries |
Whirlpool and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Flexsteel Industries
The main advantage of trading using opposite Whirlpool and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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