Correlation Between CenterPoint Energy and Thor Industries
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy 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 CenterPoint Energy and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Thor Industries, you can compare the effects of market volatilities on CenterPoint Energy 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 CenterPoint Energy with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Thor Industries.
Diversification Opportunities for CenterPoint Energy and Thor Industries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CenterPoint and Thor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and CenterPoint Energy 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 CenterPoint Energy 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 CenterPoint Energy i.e., CenterPoint Energy and Thor Industries go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Thor Industries
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 3.18 times less return on investment than Thor Industries. But when comparing it to its historical volatility, CenterPoint Energy is 1.84 times less risky than Thor Industries. It trades about 0.02 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 7,939 in Thor Industries on September 3, 2024 and sell it today you would earn a total of 3,221 from holding Thor Industries or generate 40.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CenterPoint Energy vs. Thor Industries
Performance |
| Timeline |
| CenterPoint Energy |
| Thor Industries |
CenterPoint Energy and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Thor Industries
The main advantage of trading using opposite CenterPoint Energy and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy 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.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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