Correlation Between Whirlpool and Tempur Sealy

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

Diversification Opportunities for Whirlpool and Tempur Sealy

-0.32
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Whirlpool and Tempur Sealy

Considering the 90-day investment horizon Whirlpool is expected to under-perform the Tempur Sealy. In addition to that, Whirlpool is 1.01 times more volatile than Tempur Sealy International. It trades about -0.02 of its total potential returns per unit of risk. Tempur Sealy International is currently generating about 0.05 per unit of volatility. If you would invest  4,366  in Tempur Sealy International on December 29, 2023 and sell it today you would earn a total of  1,257  from holding Tempur Sealy International or generate 28.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.66%
ValuesDaily Returns

Whirlpool  vs.  Tempur Sealy International

 Performance 
       Timeline  
Whirlpool 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Whirlpool has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Whirlpool is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Tempur Sealy Interna 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tempur Sealy International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tempur Sealy may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Whirlpool and Tempur Sealy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Whirlpool and Tempur Sealy

The main advantage of trading using opposite Whirlpool and Tempur Sealy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool position performs unexpectedly, Tempur Sealy 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 Tempur Sealy will offset losses from the drop in Tempur Sealy's long position.
The idea behind Whirlpool and Tempur Sealy International 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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