Correlation Between Thor Industries and Merck
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Merck 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 Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Merck Company, you can compare the effects of market volatilities on Thor Industries and Merck 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 Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Merck.
Diversification Opportunities for Thor Industries and Merck
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thor and Merck is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company 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 Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Thor Industries i.e., Thor Industries and Merck go up and down completely randomly.
Pair Corralation between Thor Industries and Merck
Considering the 90-day investment horizon Thor Industries is expected to generate 2.43 times more return on investment than Merck. However, Thor Industries is 2.43 times more volatile than Merck Company. It trades about 0.08 of its potential returns per unit of risk. Merck Company is currently generating about 0.18 per unit of risk. If you would invest 8,382 in Thor Industries on January 25, 2024 and sell it today you would earn a total of 1,983 from holding Thor Industries or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Merck Company
Performance |
| Timeline |
| Thor Industries |
| Merck Company |
Thor Industries and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Merck
The main advantage of trading using opposite Thor Industries and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| Thor Industries vs. Twin Vee Powercats | Thor Industries vs. Curtiss Motorcycles | Thor Industries vs. Marine Products | Thor Industries vs. MCBC 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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