Correlation Between Pool and Winnebago Industries
Can any of the company-specific risk be diversified away by investing in both Pool and Winnebago 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 Pool and Winnebago Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and Winnebago Industries, you can compare the effects of market volatilities on Pool and Winnebago 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 Pool with a short position of Winnebago Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Winnebago Industries.
Diversification Opportunities for Pool and Winnebago Industries
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pool and Winnebago is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Winnebago Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winnebago Industries and Pool 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 Pool Corporation are associated (or correlated) with Winnebago Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winnebago Industries has no effect on the direction of Pool i.e., Pool and Winnebago Industries go up and down completely randomly.
Pair Corralation between Pool and Winnebago Industries
Given the investment horizon of 90 days Pool is expected to generate 2.89 times less return on investment than Winnebago Industries. But when comparing it to its historical volatility, Pool Corporation is 1.11 times less risky than Winnebago Industries. It trades about 0.01 of its potential returns per unit of risk. Winnebago Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,532 in Winnebago Industries on January 26, 2024 and sell it today you would earn a total of 926.00 from holding Winnebago Industries or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. Winnebago Industries
Performance |
| Timeline |
| Pool |
| Winnebago Industries |
Pool and Winnebago Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and Winnebago Industries
The main advantage of trading using opposite Pool and Winnebago Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool position performs unexpectedly, Winnebago 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 Winnebago Industries will offset losses from the drop in Winnebago Industries' long position.The idea behind Pool Corporation and Winnebago Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Winnebago Industries vs. Hycroft Mining Holding | Winnebago Industries vs. Imperial Petroleum | Winnebago Industries vs. Exela Technologies | Winnebago Industries vs. Camber Energy |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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