Correlation Between Thor Industries and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Park Hotels 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 Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Park Hotels Resorts, you can compare the effects of market volatilities on Thor Industries and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Park Hotels.
Diversification Opportunities for Thor Industries and Park Hotels
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thor and Park is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Thor Industries i.e., Thor Industries and Park Hotels go up and down completely randomly.
Pair Corralation between Thor Industries and Park Hotels
Considering the 90-day investment horizon Thor Industries is expected to generate 1.74 times less return on investment than Park Hotels. In addition to that, Thor Industries is 1.09 times more volatile than Park Hotels Resorts. It trades about 0.16 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.3 per unit of volatility. If you would invest 1,384 in Park Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 171.00 from holding Park Hotels Resorts or generate 12.36% 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. Park Hotels Resorts
Performance |
| Timeline |
| Thor Industries |
| Park Hotels Resorts |
Thor Industries and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Park Hotels
The main advantage of trading using opposite Thor Industries and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.The idea behind Thor Industries and Park Hotels Resorts 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.| Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Service Properties Trust | Park Hotels vs. RLJ Lodging Trust |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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