Correlation Between Thor Industries and SCHWAB

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Can any of the company-specific risk be diversified away by investing in both Thor Industries and SCHWAB 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 SCHWAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and SCHWAB CHARLES P, you can compare the effects of market volatilities on Thor Industries and SCHWAB 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 SCHWAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and SCHWAB.

Diversification Opportunities for Thor Industries and SCHWAB

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Thor and SCHWAB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and SCHWAB CHARLES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHWAB CHARLES P 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 SCHWAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHWAB CHARLES P has no effect on the direction of Thor Industries i.e., Thor Industries and SCHWAB go up and down completely randomly.

Pair Corralation between Thor Industries and SCHWAB

Considering the 90-day investment horizon Thor Industries is expected to under-perform the SCHWAB. In addition to that, Thor Industries is 3.56 times more volatile than SCHWAB CHARLES P. It trades about -0.09 of its total potential returns per unit of risk. SCHWAB CHARLES P is currently generating about -0.29 per unit of volatility. If you would invest  9,942  in SCHWAB CHARLES P on September 14, 2024 and sell it today you would lose (270.00) from holding SCHWAB CHARLES P or give up 2.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Thor Industries  vs.  SCHWAB CHARLES P

 Performance 
       Timeline  
Thor Industries 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Thor Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
SCHWAB CHARLES P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SCHWAB CHARLES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SCHWAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Thor Industries and SCHWAB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thor Industries and SCHWAB

The main advantage of trading using opposite Thor Industries and SCHWAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, SCHWAB 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 SCHWAB will offset losses from the drop in SCHWAB's long position.
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The idea behind Thor Industries and SCHWAB CHARLES P 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.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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