Correlation Between Forrester Research and Thermon Group
Can any of the company-specific risk be diversified away by investing in both Forrester Research 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 Forrester Research and Thermon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forrester Research and Thermon Group Holdings, you can compare the effects of market volatilities on Forrester Research 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 Forrester Research with a short position of Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forrester Research and Thermon Group.
Diversification Opportunities for Forrester Research and Thermon Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forrester and Thermon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Forrester Research 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 Forrester Research 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 Forrester Research 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 Forrester Research i.e., Forrester Research and Thermon Group go up and down completely randomly.
Pair Corralation between Forrester Research and Thermon Group
Given the investment horizon of 90 days Forrester Research is expected to generate 1.56 times less return on investment than Thermon Group. But when comparing it to its historical volatility, Forrester Research is 1.02 times less risky than Thermon Group. It trades about 0.14 of its potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,766 in Thermon Group Holdings on August 24, 2024 and sell it today you would earn a total of 352.00 from holding Thermon Group Holdings or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forrester Research vs. Thermon Group Holdings
Performance |
| Timeline |
| Forrester Research |
| Thermon Group Holdings |
Forrester Research and Thermon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forrester Research and Thermon Group
The main advantage of trading using opposite Forrester Research and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forrester Research 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.| Forrester Research vs. Huron Consulting Group | Forrester Research vs. ICF International | Forrester Research vs. Franklin Covey | Forrester Research vs. FTI Consulting |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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