Correlation Between Malibu Boats and Thor Industries

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

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

Diversification Opportunities for Malibu Boats and Thor Industries

0.65

Correlation Coefficient

Malibu Boats  Thor Industries

Poor diversification

The 3 months correlation between Malibu and Thor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Malibu Boats 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 Malibu Boats 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 Malibu Boats i.e., Malibu Boats and Thor Industries go up and down completely randomly.

Pair Corralation between Malibu Boats and Thor Industries

Given the investment horizon of 90 days Malibu Boats is expected to generate 1.13 times more return on investment than Thor Industries. However, Malibu Boats is 1.13 times more volatile than Thor Industries. It trades about 0.13 of its potential returns per unit of risk. Thor Industries is currently generating about 0.06 per unit of risk. If you would invest  3,606  in Malibu Boats on September 2, 2024 and sell it today you would earn a total of  729.00  from holding Malibu Boats or generate 20.22% return on investment over 90 days.

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

Malibu Boats  vs.  Thor Industries

Malibu Boats

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malibu Boats are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Malibu Boats unveiled solid returns over the last few months and may actually be approaching a breakup point.

Thor Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Thor Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Malibu Boats and Thor Industries

The main advantage of trading using opposite Malibu Boats and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats 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 Malibu Boats 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.