Correlation Between Nasdaq and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Thor Industries, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Thor Industries.
Diversification Opportunities for Nasdaq and Thor Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nasdaq and Thor is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Nasdaq 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 Nasdaq 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 Nasdaq i.e., Nasdaq and Thor Industries go up and down completely randomly.
Pair Corralation between Nasdaq and Thor Industries
Given the investment horizon of 90 days Nasdaq is expected to generate 1.79 times less return on investment than Thor Industries. But when comparing it to its historical volatility, Nasdaq Inc is 1.92 times less risky than Thor Industries. It trades about 0.05 of its potential returns per unit of risk. Thor Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,286 in Thor Industries on September 19, 2024 and sell it today you would earn a total of 3,050 from holding Thor Industries or generate 41.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.64% |
| Values | Daily Returns |
Nasdaq Inc vs. Thor Industries
Performance |
| Timeline |
| Nasdaq Inc |
| Thor Industries |
Nasdaq and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Thor Industries
The main advantage of trading using opposite Nasdaq and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq 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. L3Harris Technologies | Thor Industries vs. Worldwide Healthcare Trust | Thor Industries vs. Bellevue Healthcare Trust | Thor Industries vs. HCA Healthcare |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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