Correlation Between Thermon Group and Select Energy
Can any of the company-specific risk be diversified away by investing in both Thermon Group and Select Energy 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 Select Energy 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 Select Energy Services, you can compare the effects of market volatilities on Thermon Group and Select Energy 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 Select Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Select Energy.
Diversification Opportunities for Thermon Group and Select Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thermon and Select is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Select Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Energy Services 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 Select Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Energy Services has no effect on the direction of Thermon Group i.e., Thermon Group and Select Energy go up and down completely randomly.
Pair Corralation between Thermon Group and Select Energy
Considering the 90-day investment horizon Thermon Group is expected to generate 3.75 times less return on investment than Select Energy. But when comparing it to its historical volatility, Thermon Group Holdings is 1.75 times less risky than Select Energy. It trades about 0.06 of its potential returns per unit of risk. Select Energy Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,121 in Select Energy Services on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Select Energy Services or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermon Group Holdings vs. Select Energy Services
Performance |
| Timeline |
| Thermon Group Holdings |
| Select Energy Services |
Thermon Group and Select Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermon Group and Select Energy
The main advantage of trading using opposite Thermon Group and Select Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group position performs unexpectedly, Select Energy 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 Select Energy will offset losses from the drop in Select Energy's long position.| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
| Select Energy vs. ProPetro Holding Corp | Select Energy vs. RPC Inc | Select Energy vs. MRC Global | Select Energy vs. Expro Group Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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