Correlation Between Thor Industries and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Cadence Design 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 Thor Industries and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Cadence Design Systems, you can compare the effects of market volatilities on Thor Industries and Cadence Design 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 Thor Industries with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Cadence Design.
Diversification Opportunities for Thor Industries and Cadence Design
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thor and Cadence is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems and Thor Industries 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 Thor Industries are associated (or correlated) with Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Thor Industries i.e., Thor Industries and Cadence Design go up and down completely randomly.
Pair Corralation between Thor Industries and Cadence Design
Considering the 90-day investment horizon Thor Industries is expected to generate 0.86 times more return on investment than Cadence Design. However, Thor Industries is 1.17 times less risky than Cadence Design. It trades about 0.06 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.04 per unit of risk. If you would invest 9,826 in Thor Industries on August 29, 2024 and sell it today you would earn a total of 1,489 from holding Thor Industries or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Cadence Design Systems
Performance |
| Timeline |
| Thor Industries |
| Cadence Design Systems |
Thor Industries and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Cadence Design
The main advantage of trading using opposite Thor Industries and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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