Correlation Between Aptiv PLC and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC 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 Aptiv PLC and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Thor Industries, you can compare the effects of market volatilities on Aptiv PLC 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 Aptiv PLC with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Thor Industries.
Diversification Opportunities for Aptiv PLC and Thor Industries
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aptiv and Thor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC i.e., Aptiv PLC and Thor Industries go up and down completely randomly.
Pair Corralation between Aptiv PLC and Thor Industries
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Thor Industries. But the stock apears to be less risky and, when comparing its historical volatility, Aptiv PLC is 1.03 times less risky than Thor Industries. The stock trades about -0.03 of its potential returns per unit of risk. The Thor Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,566 in Thor Industries on September 26, 2024 and sell it today you would earn a total of 2,077 from holding Thor Industries or generate 27.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Thor Industries
Performance |
| Timeline |
| Aptiv PLC |
| Thor Industries |
Aptiv PLC and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Thor Industries
The main advantage of trading using opposite Aptiv PLC and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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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