Correlation Between Brunswick and Thor Industries

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

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

Diversification Opportunities for Brunswick and Thor Industries

0.86

Correlation Coefficient

Brunswick  Thor Industries

Very poor diversification

The 3 months correlation between Brunswick and Thor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Thor Industries go up and down completely randomly.

Pair Corralation between Brunswick and Thor Industries

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.71 times more return on investment than Thor Industries. However, Brunswick is 1.41 times less risky than Thor Industries. It trades about -0.1 of its potential returns per unit of risk. Thor Industries is currently generating about -0.07 per unit of risk. If you would invest  6,406  in Brunswick on December 28, 2024 and sell it today you would lose (807.00) from holding Brunswick or give up 12.6% of portfolio value over 90 days.

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

Brunswick  vs.  Thor Industries

Brunswick

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Thor Industries

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brunswick and Thor Industries

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