Correlation Between YY and Whirlpool
Can any of the company-specific risk be diversified away by investing in both YY 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 YY and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Whirlpool, you can compare the effects of market volatilities on YY 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 YY with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Whirlpool.
Diversification Opportunities for YY and Whirlpool
Good diversification
The 3 months correlation between YY and Whirlpool is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and YY 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 YY Inc Class 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 YY i.e., YY and Whirlpool go up and down completely randomly.
Pair Corralation between YY and Whirlpool
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 1.04 times more return on investment than Whirlpool. However, YY is 1.04 times more volatile than Whirlpool. It trades about 0.0 of its potential returns per unit of risk. Whirlpool is currently generating about -0.05 per unit of risk. If you would invest 3,443 in YY Inc Class on January 24, 2024 and sell it today you would lose (163.00) from holding YY Inc Class or give up 4.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Whirlpool
Performance |
| Timeline |
| YY Inc Class |
| Whirlpool |
YY and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Whirlpool
The main advantage of trading using opposite YY and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY 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.The idea behind YY Inc Class and Whirlpool 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.| Whirlpool vs. Flexsteel Industries | Whirlpool vs. Natuzzi SpA | Whirlpool vs. Crown Crafts | Whirlpool vs. Bassett Furniture 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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