Correlation Between Thor Industries and Stepstone
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Stepstone 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 Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Stepstone Group, you can compare the effects of market volatilities on Thor Industries and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Stepstone.
Diversification Opportunities for Thor Industries and Stepstone
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and Stepstone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Thor Industries i.e., Thor Industries and Stepstone go up and down completely randomly.
Pair Corralation between Thor Industries and Stepstone
Considering the 90-day investment horizon Thor Industries is expected to generate 1.73 times less return on investment than Stepstone. But when comparing it to its historical volatility, Thor Industries is 1.46 times less risky than Stepstone. It trades about 0.16 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,900 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 689.00 from holding Stepstone Group or generate 11.68% 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. Stepstone Group
Performance |
| Timeline |
| Thor Industries |
| Stepstone Group |
Thor Industries and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Stepstone
The main advantage of trading using opposite Thor Industries and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.The idea behind Thor Industries and Stepstone Group 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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