Correlation Between BRP and Thor Industries
Can any of the company-specific risk be diversified away by investing in both BRP 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 BRP and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Thor Industries, you can compare the effects of market volatilities on BRP 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 BRP with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Thor Industries.
Diversification Opportunities for BRP and Thor Industries
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BRP and Thor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and BRP 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 BRP Inc 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 BRP i.e., BRP and Thor Industries go up and down completely randomly.
Pair Corralation between BRP and Thor Industries
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Thor Industries. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.07 times less risky than Thor Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Thor Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 12,637 in Thor Industries on August 27, 2024 and sell it today you would lose (1,419) from holding Thor Industries or give up 11.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Thor Industries
Performance |
| Timeline |
| BRP Inc |
| Thor Industries |
BRP and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Thor Industries
The main advantage of trading using opposite BRP and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP 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.The idea behind BRP Inc and Thor Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Thor Industries vs. Nio Class A | Thor Industries vs. Rivian Automotive | Thor Industries vs. Lucid Group | Thor Industries vs. Tesla Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |