Correlation Between Thor Industries and MT Bank
Can any of the company-specific risk be diversified away by investing in both Thor Industries and MT Bank 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 Thor Industries and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and MT Bank Corp, you can compare the effects of market volatilities on Thor Industries and MT Bank 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 Thor Industries with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and MT Bank.
Diversification Opportunities for Thor Industries and MT Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and 0JW2 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Thor 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 Thor Industries are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Thor Industries i.e., Thor Industries and MT Bank go up and down completely randomly.
Pair Corralation between Thor Industries and MT Bank
Assuming the 90 days trading horizon Thor Industries is expected to under-perform the MT Bank. In addition to that, Thor Industries is 3.93 times more volatile than MT Bank Corp. It trades about -0.16 of its total potential returns per unit of risk. MT Bank Corp is currently generating about -0.47 per unit of volatility. If you would invest 19,961 in MT Bank Corp on December 8, 2024 and sell it today you would lose (2,493) from holding MT Bank Corp or give up 12.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Thor Industries vs. MT Bank Corp
Performance |
| Timeline |
| Thor Industries |
| MT Bank Corp |
Thor Industries and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and MT Bank
The main advantage of trading using opposite Thor Industries and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Thor Industries vs. MTI Wireless Edge | ||
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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