Correlation Between Whirlpool and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Mohawk 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 Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Mohawk Industries, you can compare the effects of market volatilities on Whirlpool and Mohawk 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Mohawk Industries.
Diversification Opportunities for Whirlpool and Mohawk Industries
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whirlpool and Mohawk is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Whirlpool i.e., Whirlpool and Mohawk Industries go up and down completely randomly.
Pair Corralation between Whirlpool and Mohawk Industries
Considering the 90-day investment horizon Whirlpool is expected to under-perform the Mohawk Industries. In addition to that, Whirlpool is 2.23 times more volatile than Mohawk Industries. It trades about -0.05 of its total potential returns per unit of risk. Mohawk Industries is currently generating about 0.25 per unit of volatility. If you would invest 11,592 in Mohawk Industries on November 2, 2024 and sell it today you would earn a total of 1,057 from holding Mohawk Industries or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool vs. Mohawk Industries
Performance |
| Timeline |
| Whirlpool |
| Mohawk Industries |
Whirlpool and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Mohawk Industries
The main advantage of trading using opposite Whirlpool and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Mohawk 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
| Mohawk Industries vs. Bassett Furniture Industries | Mohawk Industries vs. Ethan Allen Interiors | Mohawk Industries vs. Natuzzi SpA | Mohawk Industries vs. Flexsteel Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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