Correlation Between Middleby Corp and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Middleby Corp 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 Middleby Corp and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middleby Corp and Whirlpool, you can compare the effects of market volatilities on Middleby Corp 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 Middleby Corp with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middleby Corp and Whirlpool.
Diversification Opportunities for Middleby Corp and Whirlpool
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Middleby and Whirlpool is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Middleby Corp and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Middleby Corp 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 Middleby Corp 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 Middleby Corp i.e., Middleby Corp and Whirlpool go up and down completely randomly.
Pair Corralation between Middleby Corp and Whirlpool
Given the investment horizon of 90 days Middleby Corp is expected to under-perform the Whirlpool. But the stock apears to be less risky and, when comparing its historical volatility, Middleby Corp is 1.33 times less risky than Whirlpool. The stock trades about -0.21 of its potential returns per unit of risk. The Whirlpool is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 11,223 in Whirlpool on January 26, 2024 and sell it today you would lose (655.00) from holding Whirlpool or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Middleby Corp vs. Whirlpool
Performance |
| Timeline |
| Middleby Corp |
| Whirlpool |
Middleby Corp and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middleby Corp and Whirlpool
The main advantage of trading using opposite Middleby Corp and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middleby Corp 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.| Middleby Corp vs. Emerson Electric | Middleby Corp vs. Smith AO | Middleby Corp vs. Eaton PLC | Middleby Corp vs. Flowserve |
| Whirlpool vs. Tempur Sealy International | Whirlpool vs. La Z Boy Incorporated | Whirlpool vs. MasterBrand | Whirlpool vs. Ethan Allen Interiors |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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