Correlation Between Escalade Incorporated and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Escalade Incorporated 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 Escalade Incorporated and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escalade Incorporated and Thor Industries, you can compare the effects of market volatilities on Escalade Incorporated 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 Escalade Incorporated with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escalade Incorporated and Thor Industries.
Diversification Opportunities for Escalade Incorporated and Thor Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Escalade and Thor is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Escalade Incorporated 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 Escalade Incorporated 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 Escalade Incorporated i.e., Escalade Incorporated and Thor Industries go up and down completely randomly.
Pair Corralation between Escalade Incorporated and Thor Industries
Given the investment horizon of 90 days Escalade Incorporated is expected to generate 1.36 times more return on investment than Thor Industries. However, Escalade Incorporated is 1.36 times more volatile than Thor Industries. It trades about 0.21 of its potential returns per unit of risk. Thor Industries is currently generating about -0.19 per unit of risk. If you would invest 1,483 in Escalade Incorporated on September 12, 2024 and sell it today you would earn a total of 158.00 from holding Escalade Incorporated or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Escalade Incorporated vs. Thor Industries
Performance |
| Timeline |
| Escalade Incorporated |
| Thor Industries |
Escalade Incorporated and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escalade Incorporated and Thor Industries
The main advantage of trading using opposite Escalade Incorporated and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated 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.| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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