Correlation Between Lennox International and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Lennox International and Whirlpool 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 Lennox International and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and Whirlpool, you can compare the effects of market volatilities on Lennox International and Whirlpool 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 Lennox International with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and Whirlpool.
Diversification Opportunities for Lennox International and Whirlpool
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lennox and Whirlpool is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Lennox International 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 Lennox International are associated (or correlated) with Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Lennox International i.e., Lennox International and Whirlpool go up and down completely randomly.
Pair Corralation between Lennox International and Whirlpool
Considering the 90-day investment horizon Lennox International is expected to generate 0.89 times more return on investment than Whirlpool. However, Lennox International is 1.12 times less risky than Whirlpool. It trades about 0.11 of its potential returns per unit of risk. Whirlpool is currently generating about -0.01 per unit of risk. If you would invest 21,597 in Lennox International on January 19, 2024 and sell it today you would earn a total of 24,267 from holding Lennox International or generate 112.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lennox International vs. Whirlpool
Performance |
| Timeline |
| Lennox International |
| Whirlpool |
Lennox International and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and Whirlpool
The main advantage of trading using opposite Lennox International and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International vs. Carlisle Companies Incorporated | Lennox International vs. Fortune Brands Innovations |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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