Correlation Between Thor Industries and Universal Health
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Universal Health 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 Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Universal Health Services, you can compare the effects of market volatilities on Thor Industries and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Universal Health.
Diversification Opportunities for Thor Industries and Universal Health
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thor and Universal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Thor Industries i.e., Thor Industries and Universal Health go up and down completely randomly.
Pair Corralation between Thor Industries and Universal Health
Assuming the 90 days trading horizon Thor Industries is expected to under-perform the Universal Health. In addition to that, Thor Industries is 1.78 times more volatile than Universal Health Services. It trades about -0.27 of its total potential returns per unit of risk. Universal Health Services is currently generating about -0.29 per unit of volatility. If you would invest 19,632 in Universal Health Services on September 22, 2024 and sell it today you would lose (1,615) from holding Universal Health Services or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Universal Health Services
Performance |
| Timeline |
| Thor Industries |
| Universal Health Services |
Thor Industries and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Universal Health
The main advantage of trading using opposite Thor Industries and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Thor Industries vs. Samsung Electronics Co | Thor Industries vs. Samsung Electronics Co | Thor Industries vs. Hyundai Motor | Thor Industries vs. Reliance Industries Ltd |
| Universal Health vs. Samsung Electronics Co | Universal Health vs. Samsung Electronics Co | Universal Health vs. Hyundai Motor | Universal Health vs. Reliance Industries Ltd |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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