Correlation Between Dana and Thor Industries

Can any of the company-specific risk be diversified away by investing in both Dana 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 Dana and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dana Inc and Thor Industries, you can compare the effects of market volatilities on Dana 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 Dana with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Thor Industries.

Diversification Opportunities for Dana and Thor Industries

0.43

Correlation Coefficient

Dana  Thor Industries

Very weak diversification

The 3 months correlation between Dana and Thor is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Dana 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 Dana Inc 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 Dana i.e., Dana and Thor Industries go up and down completely randomly.

Pair Corralation between Dana and Thor Industries

Considering the 90-day investment horizon Dana Inc is expected to under-perform the Thor Industries. But the stock apears to be less risky and, when comparing its historical volatility, Dana Inc is 1.05 times less risky than Thor Industries. The stock trades about -0.01 of its potential returns per unit of risk. The Thor Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,856  in Thor Industries on January 25, 2024 and sell it today you would earn a total of  2,481  from holding Thor Industries or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dana Inc  vs.  Thor Industries

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Thor Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Dana and Thor Industries

The main advantage of trading using opposite Dana and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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.

The idea behind Dana Inc and Thor Industries 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.