Correlation Between Whirlpool and Sony
Can any of the company-specific risk be diversified away by investing in both Whirlpool and Sony 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 Sony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool SA and Sony Group, you can compare the effects of market volatilities on Whirlpool and Sony 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 Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Sony.
Diversification Opportunities for Whirlpool and Sony
Very good diversification
The 3 months correlation between Whirlpool and Sony is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool SA and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 SA are associated (or correlated) with Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Whirlpool i.e., Whirlpool and Sony go up and down completely randomly.
Pair Corralation between Whirlpool and Sony
Assuming the 90 days trading horizon Whirlpool SA is expected to under-perform the Sony. But the preferred stock apears to be less risky and, when comparing its historical volatility, Whirlpool SA is 2.2 times less risky than Sony. The preferred stock trades about -0.13 of its potential returns per unit of risk. The Sony Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 10,094 in Sony Group on August 26, 2024 and sell it today you would earn a total of 985.00 from holding Sony Group or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whirlpool SA vs. Sony Group
Performance |
| Timeline |
| Whirlpool SA |
| Sony Group |
Whirlpool and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whirlpool and Sony
The main advantage of trading using opposite Whirlpool and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Sony 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 Sony will offset losses from the drop in Sony's long position.| Whirlpool vs. Lupatech SA | Whirlpool vs. Rossi Residencial SA | Whirlpool vs. Fras le SA | Whirlpool vs. Clave Indices De |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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