Correlation Between Whirlpool and IRobot
Can any of the company-specific risk be diversified away by investing in both Whirlpool and IRobot 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 IRobot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and iRobot, you can compare the effects of market volatilities on Whirlpool and IRobot 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 IRobot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and IRobot.
Diversification Opportunities for Whirlpool and IRobot
Significant diversification
The 3 months correlation between Whirlpool and IRobot is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot 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 IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRobot has no effect on the direction of Whirlpool i.e., Whirlpool and IRobot go up and down completely randomly.
Pair Corralation between Whirlpool and IRobot
Considering the 90-day investment horizon Whirlpool is expected to under-perform the IRobot. But the stock apears to be less risky and, when comparing its historical volatility, Whirlpool is 2.62 times less risky than IRobot. The stock trades about -0.05 of its potential returns per unit of risk. The iRobot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 795.00 in iRobot on November 2, 2024 and sell it today you would lose (39.00) from holding iRobot or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. iRobot
Performance |
| Timeline |
| Whirlpool |
| iRobot |
Whirlpool and IRobot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and IRobot
The main advantage of trading using opposite Whirlpool and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| IRobot vs. Tempur Sealy International | IRobot vs. La Z Boy Incorporated | IRobot vs. Purple Innovation | IRobot vs. MasterBrand |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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