Correlation Between Thermon Group and Graco
Can any of the company-specific risk be diversified away by investing in both Thermon Group and Graco 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 Thermon Group and Graco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermon Group Holdings and Graco Inc, you can compare the effects of market volatilities on Thermon Group and Graco 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 Thermon Group with a short position of Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Graco.
Diversification Opportunities for Thermon Group and Graco
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thermon and Graco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Thermon Group 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 Thermon Group Holdings are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Thermon Group i.e., Thermon Group and Graco go up and down completely randomly.
Pair Corralation between Thermon Group and Graco
Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 1.64 times more return on investment than Graco. However, Thermon Group is 1.64 times more volatile than Graco Inc. It trades about 0.32 of its potential returns per unit of risk. Graco Inc is currently generating about 0.33 per unit of risk. If you would invest 2,661 in Thermon Group Holdings on August 31, 2024 and sell it today you would earn a total of 495.00 from holding Thermon Group Holdings or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermon Group Holdings vs. Graco Inc
Performance |
| Timeline |
| Thermon Group Holdings |
| Graco Inc |
Thermon Group and Graco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermon Group and Graco
The main advantage of trading using opposite Thermon Group and Graco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group position performs unexpectedly, Graco 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 Graco will offset losses from the drop in Graco's long position.| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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