Correlation Between Gentex and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Gentex 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 Gentex and Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Thor Industries, you can compare the effects of market volatilities on Gentex 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 Gentex with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Thor Industries.
Diversification Opportunities for Gentex and Thor Industries
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gentex and Thor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Gentex 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 Gentex 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 Gentex i.e., Gentex and Thor Industries go up and down completely randomly.
Pair Corralation between Gentex and Thor Industries
Given the investment horizon of 90 days Gentex is expected to generate 1.58 times less return on investment than Thor Industries. But when comparing it to its historical volatility, Gentex is 1.67 times less risky than Thor Industries. It trades about 0.04 of its potential returns per unit of risk. Thor Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,954 in Thor Industries on December 30, 2023 and sell it today you would earn a total of 3,780 from holding Thor Industries or generate 47.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gentex vs. Thor Industries
Performance |
Timeline |
Gentex |
Thor Industries |
Gentex and Thor Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gentex and Thor Industries
The main advantage of trading using opposite Gentex and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex 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.Gentex vs. Mobileye Global Class | Gentex vs. Quantumscape Corp | Gentex vs. ECARX Holdings Warrants | Gentex vs. Monro Muffler Brake |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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