Correlation Between Thor Industries and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Thor Industries and CenterPoint Energy 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 CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and CenterPoint Energy, you can compare the effects of market volatilities on Thor Industries and CenterPoint Energy 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and CenterPoint Energy.
Diversification Opportunities for Thor Industries and CenterPoint Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and CenterPoint is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Thor Industries i.e., Thor Industries and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Thor Industries and CenterPoint Energy
Considering the 90-day investment horizon Thor Industries is expected to generate 1.84 times more return on investment than CenterPoint Energy. However, Thor Industries is 1.84 times more volatile than CenterPoint Energy. It trades about 0.04 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.02 per unit of risk. If you would invest 7,939 in Thor Industries on September 3, 2024 and sell it today you would earn a total of 3,221 from holding Thor Industries or generate 40.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. CenterPoint Energy
Performance |
| Timeline |
| Thor Industries |
| CenterPoint Energy |
Thor Industries and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and CenterPoint Energy
The main advantage of trading using opposite Thor Industries and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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