Correlation Between POWR Lithium and Thor Industries
Can any of the company-specific risk be diversified away by investing in both POWR Lithium 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 POWR Lithium and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POWR Lithium Corp and Thor Industries, you can compare the effects of market volatilities on POWR Lithium 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 POWR Lithium with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWR Lithium and Thor Industries.
Diversification Opportunities for POWR Lithium and Thor Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between POWR and Thor is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and POWR Lithium 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 POWR Lithium Corp 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 POWR Lithium i.e., POWR Lithium and Thor Industries go up and down completely randomly.
Pair Corralation between POWR Lithium and Thor Industries
Assuming the 90 days horizon POWR Lithium Corp is expected to generate 10.04 times more return on investment than Thor Industries. However, POWR Lithium is 10.04 times more volatile than Thor Industries. It trades about 0.1 of its potential returns per unit of risk. Thor Industries is currently generating about -0.17 per unit of risk. If you would invest 3.84 in POWR Lithium Corp on October 26, 2024 and sell it today you would earn a total of 0.46 from holding POWR Lithium Corp or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
POWR Lithium Corp vs. Thor Industries
Performance |
| Timeline |
| POWR Lithium Corp |
| Thor Industries |
POWR Lithium and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWR Lithium and Thor Industries
The main advantage of trading using opposite POWR Lithium and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWR Lithium 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.| POWR Lithium vs. Autohome | POWR Lithium vs. Playa Hotels Resorts | POWR Lithium vs. Funko Inc | POWR Lithium vs. Bassett Furniture Industries |
| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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