Correlation Between Thor Industries and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Rivian Automotive 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 Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Rivian Automotive, you can compare the effects of market volatilities on Thor Industries and Rivian Automotive 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 Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Rivian Automotive.
Diversification Opportunities for Thor Industries and Rivian Automotive
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thor and Rivian is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive 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 Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Thor Industries i.e., Thor Industries and Rivian Automotive go up and down completely randomly.
Pair Corralation between Thor Industries and Rivian Automotive
Considering the 90-day investment horizon Thor Industries is expected to generate 0.49 times more return on investment than Rivian Automotive. However, Thor Industries is 2.03 times less risky than Rivian Automotive. It trades about 0.04 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.01 per unit of risk. If you would invest 8,044 in Thor Industries on August 28, 2024 and sell it today you would earn a total of 3,271 from holding Thor Industries or generate 40.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Rivian Automotive
Performance |
| Timeline |
| Thor Industries |
| Rivian Automotive |
Thor Industries and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Rivian Automotive
The main advantage of trading using opposite Thor Industries and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Rivian Automotive 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 Rivian Automotive will offset losses from the drop in Rivian Automotive's long position.| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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