Correlation Between Whirlpool and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Hooker Furniture 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 Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Hooker Furniture, you can compare the effects of market volatilities on Whirlpool and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Hooker Furniture.
Diversification Opportunities for Whirlpool and Hooker Furniture
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whirlpool and Hooker is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Whirlpool i.e., Whirlpool and Hooker Furniture go up and down completely randomly.
Pair Corralation between Whirlpool and Hooker Furniture
Considering the 90-day investment horizon Whirlpool is expected to generate 0.91 times more return on investment than Hooker Furniture. However, Whirlpool is 1.1 times less risky than Hooker Furniture. It trades about 0.09 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.05 per unit of risk. If you would invest 8,636 in Whirlpool on September 2, 2024 and sell it today you would earn a total of 2,506 from holding Whirlpool or generate 29.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Hooker Furniture
Performance |
| Timeline |
| Whirlpool |
| Hooker Furniture |
Whirlpool and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Hooker Furniture
The main advantage of trading using opposite Whirlpool and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Whirlpool vs. Energy Focu | Whirlpool vs. Flexsteel Industries | Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. FGI Industries |
| Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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