Correlation Between Mohawk Industries and TPX Old

Can any of the company-specific risk be diversified away by investing in both Mohawk Industries and TPX Old 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 Mohawk Industries and TPX Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mohawk Industries and TPX Old, you can compare the effects of market volatilities on Mohawk Industries and TPX Old 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 Mohawk Industries with a short position of TPX Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and TPX Old.

Diversification Opportunities for Mohawk Industries and TPX Old

-0.45

Correlation Coefficient

Mohawk Industries  TPX Old

Very good diversification

The 3 months correlation between Mohawk and TPX is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and TPX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPX Old and Mohawk Industries 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 Mohawk Industries are associated (or correlated) with TPX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPX Old has no effect on the direction of Mohawk Industries i.e., Mohawk Industries and TPX Old go up and down completely randomly.

Pair Corralation between Mohawk Industries and TPX Old

If you would invest  6,878  in TPX Old on February 22, 2025 and sell it today you would earn a total of  0.00  from holding TPX Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Mohawk Industries  vs.  TPX Old

Mohawk Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mohawk Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

TPX Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TPX Old is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mohawk Industries and TPX Old

The main advantage of trading using opposite Mohawk Industries and TPX Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries position performs unexpectedly, TPX Old 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 TPX Old will offset losses from the drop in TPX Old's long position.

The idea behind Mohawk Industries and TPX Old 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.