Correlation Between Thor Industries and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Boston Beer, you can compare the effects of market volatilities on Thor Industries and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Boston Beer.
Diversification Opportunities for Thor Industries and Boston Beer
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thor and Boston is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Thor Industries i.e., Thor Industries and Boston Beer go up and down completely randomly.
Pair Corralation between Thor Industries and Boston Beer
Considering the 90-day investment horizon Thor Industries is expected to generate 0.99 times more return on investment than Boston Beer. However, Thor Industries is 1.01 times less risky than Boston Beer. It trades about 0.03 of its potential returns per unit of risk. Boston Beer is currently generating about 0.0 per unit of risk. If you would invest 7,566 in Thor Industries on September 26, 2024 and sell it today you would earn a total of 2,077 from holding Thor Industries or generate 27.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Boston Beer
Performance |
| Timeline |
| Thor Industries |
| Boston Beer |
Thor Industries and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Boston Beer
The main advantage of trading using opposite Thor Industries and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Heineken NV | Boston Beer vs. Suntory Beverage Food |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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