Correlation Between Coca Cola and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Thor Industries 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 Coca Cola and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Co and Thor Industries, you can compare the effects of market volatilities on Coca Cola and Thor Industries 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 Coca Cola with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Thor Industries.
Diversification Opportunities for Coca Cola and Thor Industries
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Thor is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Co and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Coca Cola 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 Coca Cola Co are associated (or correlated) with Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Coca Cola i.e., Coca Cola and Thor Industries go up and down completely randomly.
Pair Corralation between Coca Cola and Thor Industries
Assuming the 90 days trading horizon Coca Cola is expected to generate 3.36 times less return on investment than Thor Industries. But when comparing it to its historical volatility, Coca Cola Co is 3.01 times less risky than Thor Industries. It trades about 0.04 of its potential returns per unit of risk. Thor Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,892 in Thor Industries on September 19, 2024 and sell it today you would earn a total of 2,444 from holding Thor Industries or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.16% |
| Values | Daily Returns |
Coca Cola Co vs. Thor Industries
Performance |
| Timeline |
| Coca Cola |
| Thor Industries |
Coca Cola and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Thor Industries
The main advantage of trading using opposite Coca Cola and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| Coca Cola vs. Toyota Motor Corp | Coca Cola vs. SoftBank Group Corp | Coca Cola vs. OTP Bank Nyrt | Coca Cola vs. Hershey Co |
| Thor Industries vs. L3Harris Technologies | Thor Industries vs. Worldwide Healthcare Trust | Thor Industries vs. Bellevue Healthcare Trust | Thor Industries vs. HCA Healthcare |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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