Correlation Between Whirlpool and SLM Corp

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Can any of the company-specific risk be diversified away by investing in both Whirlpool and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and SLM Corp, you can compare the effects of market volatilities on Whirlpool and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and SLM Corp.

Diversification Opportunities for Whirlpool and SLM Corp

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Whirlpool and SLM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp 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 are associated (or correlated) with SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Whirlpool i.e., Whirlpool and SLM Corp go up and down completely randomly.

Pair Corralation between Whirlpool and SLM Corp

Considering the 90-day investment horizon Whirlpool is expected to under-perform the SLM Corp. But the stock apears to be less risky and, when comparing its historical volatility, Whirlpool is 1.04 times less risky than SLM Corp. The stock trades about -0.03 of its potential returns per unit of risk. The SLM Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,855  in SLM Corp on January 20, 2024 and sell it today you would earn a total of  223.00  from holding SLM Corp or generate 12.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Whirlpool  vs.  SLM Corp

 Performance 
       Timeline  
Whirlpool 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Whirlpool has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
SLM Corp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, SLM Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Whirlpool and SLM Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Whirlpool and SLM Corp

The main advantage of trading using opposite Whirlpool and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp's long position.
The idea behind Whirlpool and SLM Corp 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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