Correlation Between Thermon Group and Equifax
Can any of the company-specific risk be diversified away by investing in both Thermon Group and Equifax 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 Thermon Group and Equifax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermon Group Holdings and Equifax, you can compare the effects of market volatilities on Thermon Group and Equifax 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 Thermon Group with a short position of Equifax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Equifax.
Diversification Opportunities for Thermon Group and Equifax
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thermon and Equifax is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and Thermon Group 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 Thermon Group Holdings are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Thermon Group i.e., Thermon Group and Equifax go up and down completely randomly.
Pair Corralation between Thermon Group and Equifax
Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 0.63 times more return on investment than Equifax. However, Thermon Group Holdings is 1.59 times less risky than Equifax. It trades about 0.15 of its potential returns per unit of risk. Equifax is currently generating about -0.1 per unit of risk. If you would invest 3,272 in Thermon Group Holdings on February 27, 2024 and sell it today you would earn a total of 296.00 from holding Thermon Group Holdings or generate 9.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Thermon Group Holdings vs. Equifax
Performance |
Timeline |
Thermon Group Holdings |
Equifax |
Thermon Group and Equifax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thermon Group and Equifax
The main advantage of trading using opposite Thermon Group and Equifax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group position performs unexpectedly, Equifax 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 Equifax will offset losses from the drop in Equifax's long position.Thermon Group vs. Illinois Tool Works | Thermon Group vs. Dover | Thermon Group vs. Cummins | Thermon Group vs. Eaton PLC |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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