Correlation Between Thor Industries and Ford
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Ford 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 Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Ford Motor, you can compare the effects of market volatilities on Thor Industries and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Ford.
Diversification Opportunities for Thor Industries and Ford
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thor and Ford is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Thor Industries i.e., Thor Industries and Ford go up and down completely randomly.
Pair Corralation between Thor Industries and Ford
Considering the 90-day investment horizon Thor Industries is expected to generate 1.16 times more return on investment than Ford. However, Thor Industries is 1.16 times more volatile than Ford Motor. It trades about 0.05 of its potential returns per unit of risk. Ford Motor is currently generating about 0.02 per unit of risk. If you would invest 7,719 in Thor Industries on January 19, 2024 and sell it today you would earn a total of 2,071 from holding Thor Industries or generate 26.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Ford Motor
Performance |
| Timeline |
| Thor Industries |
| Ford Motor |
Thor Industries and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Ford
The main advantage of trading using opposite Thor Industries and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Thor Industries vs. MCBC Holdings | Thor Industries vs. Malibu Boats | Thor Industries vs. Marine Products | Thor Industries vs. Brunswick |
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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