Correlation Between Fox Factory and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Fox Factory 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 Fox Factory and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Thor Industries, you can compare the effects of market volatilities on Fox Factory 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 Fox Factory with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Thor Industries.
Diversification Opportunities for Fox Factory and Thor Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fox and Thor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Thor Industries go up and down completely randomly.
Pair Corralation between Fox Factory and Thor Industries
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Thor Industries. In addition to that, Fox Factory is 1.26 times more volatile than Thor Industries. It trades about -0.32 of its total potential returns per unit of risk. Thor Industries is currently generating about -0.14 per unit of volatility. If you would invest 11,089 in Thor Industries on January 26, 2024 and sell it today you would lose (723.00) from holding Thor Industries or give up 6.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fox Factory Holding vs. Thor Industries
Performance |
Timeline |
Fox Factory Holding |
Thor Industries |
Fox Factory and Thor Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fox Factory and Thor Industries
The main advantage of trading using opposite Fox Factory and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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.Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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