Correlation Between Team and Thermon Group
Can any of the company-specific risk be diversified away by investing in both Team and Thermon Group 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 Team and Thermon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and Thermon Group Holdings, you can compare the effects of market volatilities on Team and Thermon Group 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 Team with a short position of Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and Thermon Group.
Diversification Opportunities for Team and Thermon Group
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Team and Thermon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group Holdings and Team 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 Team Inc are associated (or correlated) with Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of Team i.e., Team and Thermon Group go up and down completely randomly.
Pair Corralation between Team and Thermon Group
Given the investment horizon of 90 days Team is expected to generate 15.9 times less return on investment than Thermon Group. In addition to that, Team is 3.93 times more volatile than Thermon Group Holdings. It trades about 0.0 of its total potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.3 per unit of volatility. If you would invest 2,754 in Thermon Group Holdings on August 28, 2024 and sell it today you would earn a total of 470.00 from holding Thermon Group Holdings or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Team Inc vs. Thermon Group Holdings
Performance |
| Timeline |
| Team Inc |
| Thermon Group Holdings |
Team and Thermon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Team and Thermon Group
The main advantage of trading using opposite Team and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team position performs unexpectedly, Thermon Group 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 Thermon Group will offset losses from the drop in Thermon Group's long position.The idea behind Team Inc and Thermon Group Holdings 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.| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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