Correlation Between WEC Energy and Thor Industries
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Thor Industries 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 WEC Energy and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEC Energy Group and Thor Industries, you can compare the effects of market volatilities on WEC Energy and Thor Industries 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 WEC Energy with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Thor Industries.
Diversification Opportunities for WEC Energy and Thor Industries
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WEC and Thor is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and WEC Energy 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 WEC Energy Group are associated (or correlated) with Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of WEC Energy i.e., WEC Energy and Thor Industries go up and down completely randomly.
Pair Corralation between WEC Energy and Thor Industries
Considering the 90-day investment horizon WEC Energy is expected to generate 1.26 times less return on investment than Thor Industries. But when comparing it to its historical volatility, WEC Energy Group is 2.12 times less risky than Thor Industries. It trades about 0.25 of its potential returns per unit of risk. Thor Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,603 in Thor Industries on August 28, 2024 and sell it today you would earn a total of 712.00 from holding Thor Industries or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Thor Industries
Performance |
| Timeline |
| WEC Energy Group |
| Thor Industries |
WEC Energy and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Thor Industries
The main advantage of trading using opposite WEC Energy and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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