Correlation Between Whirlpool and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Leggett Platt 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 Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Leggett Platt Incorporated, you can compare the effects of market volatilities on Whirlpool and Leggett Platt 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 Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Leggett Platt.
Diversification Opportunities for Whirlpool and Leggett Platt
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Whirlpool and Leggett is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Whirlpool i.e., Whirlpool and Leggett Platt go up and down completely randomly.
Pair Corralation between Whirlpool and Leggett Platt
Considering the 90-day investment horizon Whirlpool is expected to generate 0.85 times more return on investment than Leggett Platt. However, Whirlpool is 1.17 times less risky than Leggett Platt. It trades about 0.43 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about 0.23 per unit of risk. If you would invest 11,399 in Whirlpool on October 20, 2024 and sell it today you would earn a total of 1,602 from holding Whirlpool or generate 14.05% 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. Leggett Platt Incorporated
Performance |
| Timeline |
| Whirlpool |
| Leggett Platt |
Whirlpool and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Leggett Platt
The main advantage of trading using opposite Whirlpool and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 CEOs Directory module to screen CEOs from public companies around the world.
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