Correlation Between EZGO Technologies and Thor Industries

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

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

Diversification Opportunities for EZGO Technologies and Thor Industries

-0.63

Correlation Coefficient

EZGO Technologies  Thor Industries

Excellent diversification

The 3 months correlation between EZGO and Thor is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and EZGO Technologies 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 EZGO Technologies 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 EZGO Technologies i.e., EZGO Technologies and Thor Industries go up and down completely randomly.

Pair Corralation between EZGO Technologies and Thor Industries

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Thor Industries. In addition to that, EZGO Technologies is 2.58 times more volatile than Thor Industries. It trades about -0.09 of its total potential returns per unit of risk. Thor Industries is currently generating about 0.04 per unit of volatility. If you would invest  10,674  in Thor Industries on August 30, 2024 and sell it today you would earn a total of  439.00  from holding Thor Industries or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

EZGO Technologies  vs.  Thor Industries

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies 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 and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Thor Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EZGO Technologies and Thor Industries

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

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.