Correlation Between Thor Industries and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Thor Industries and CarsalesCom 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 CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on Thor Industries and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and CarsalesCom.
Diversification Opportunities for Thor Industries and CarsalesCom
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thor and CarsalesCom is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Thor Industries i.e., Thor Industries and CarsalesCom go up and down completely randomly.
Pair Corralation between Thor Industries and CarsalesCom
Considering the 90-day investment horizon Thor Industries is expected to under-perform the CarsalesCom. But the stock apears to be less risky and, when comparing its historical volatility, Thor Industries is 1.45 times less risky than CarsalesCom. The stock trades about -0.21 of its potential returns per unit of risk. The CarsalesCom Ltd ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,840 in CarsalesCom Ltd ADR on September 19, 2024 and sell it today you would earn a total of 567.00 from holding CarsalesCom Ltd ADR or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| Thor Industries |
| CarsalesCom ADR |
Thor Industries and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and CarsalesCom
The main advantage of trading using opposite Thor Industries and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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