Correlation Between Genuine Parts and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Genuine Parts 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 Genuine Parts and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Thor Industries, you can compare the effects of market volatilities on Genuine Parts 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 Genuine Parts with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Thor Industries.
Diversification Opportunities for Genuine Parts and Thor Industries
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Genuine and Thor is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and Thor Industries go up and down completely randomly.
Pair Corralation between Genuine Parts and Thor Industries
Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the Thor Industries. But the stock apears to be less risky and, when comparing its historical volatility, Genuine Parts Co is 1.06 times less risky than Thor Industries. The stock trades about -0.03 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 |
Genuine Parts Co vs. Thor Industries
Performance |
| Timeline |
| Genuine Parts |
| Thor Industries |
Genuine Parts and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Thor Industries
The main advantage of trading using opposite Genuine Parts and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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.| Genuine Parts vs. Steven Madden | Genuine Parts vs. Vera Bradley | Genuine Parts vs. Caleres | Genuine Parts vs. Rocky Brands |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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