Correlation Between CSW Industrials and Thermon Group
Can any of the company-specific risk be diversified away by investing in both CSW Industrials and Thermon Group 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 CSW Industrials and Thermon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and Thermon Group Holdings, you can compare the effects of market volatilities on CSW Industrials and Thermon Group 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 CSW Industrials with a short position of Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and Thermon Group.
Diversification Opportunities for CSW Industrials and Thermon Group
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSW and Thermon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group Holdings and CSW Industrials 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 CSW Industrials are associated (or correlated) with Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of CSW Industrials i.e., CSW Industrials and Thermon Group go up and down completely randomly.
Pair Corralation between CSW Industrials and Thermon Group
Given the investment horizon of 90 days CSW Industrials is expected to generate 1.04 times less return on investment than Thermon Group. But when comparing it to its historical volatility, CSW Industrials is 1.19 times less risky than Thermon Group. It trades about 0.42 of its potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,621 in Thermon Group Holdings on September 1, 2024 and sell it today you would earn a total of 535.00 from holding Thermon Group Holdings or generate 20.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. Thermon Group Holdings
Performance |
| Timeline |
| CSW Industrials |
| Thermon Group Holdings |
CSW Industrials and Thermon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and Thermon Group
The main advantage of trading using opposite CSW Industrials and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials position performs unexpectedly, Thermon Group 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 Thermon Group will offset losses from the drop in Thermon Group's long position.| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT Inc |
| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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