Correlation Between MCBC Holdings and Thor Industries

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

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

Diversification Opportunities for MCBC Holdings and Thor Industries

0.24

Correlation Coefficient

MCBC Holdings  Thor Industries

Modest diversification

The 3 months correlation between MCBC and Thor is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and MCBC Holdings 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 MCBC Holdings 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 MCBC Holdings i.e., MCBC Holdings and Thor Industries go up and down completely randomly.

Pair Corralation between MCBC Holdings and Thor Industries

Given the investment horizon of 90 days MCBC Holdings is expected to under-perform the Thor Industries. But the stock apears to be less risky and, when comparing its historical volatility, MCBC Holdings is 1.02 times less risky than Thor Industries. The stock trades about -0.36 of its potential returns per unit of risk. The Thor Industries is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  11,569  in Thor Industries on January 30, 2024 and sell it today you would lose (1,510) from holding Thor Industries or give up 13.05% of portfolio value over 90 days.

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

MCBC Holdings  vs.  Thor Industries

MCBC Holdings

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private 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 uncertain 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 MCBC Holdings and Thor Industries

The main advantage of trading using opposite MCBC Holdings and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCBC Holdings 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 MCBC Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.