Correlation Between Stoneridge and Thor Industries

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

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

Diversification Opportunities for Stoneridge and Thor Industries

-0.5

Correlation Coefficient

Stoneridge  Thor Industries

Very good diversification

The 3 months correlation between Stoneridge and Thor is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Stoneridge 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 Stoneridge 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 Stoneridge i.e., Stoneridge and Thor Industries go up and down completely randomly.

Pair Corralation between Stoneridge and Thor Industries

Considering the 90-day investment horizon Stoneridge is expected to under-perform the Thor Industries. In addition to that, Stoneridge is 1.92 times more volatile than Thor Industries. It trades about -0.23 of its total potential returns per unit of risk. Thor Industries is currently generating about 0.05 per unit of volatility. If you would invest  10,470  in Thor Industries on August 31, 2024 and sell it today you would earn a total of  643.00  from holding Thor Industries or generate 6.14% return on investment over 90 days.

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

Stoneridge  vs.  Thor Industries

Stoneridge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 weak technical indicators, Thor Industries may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Stoneridge and Thor Industries

The main advantage of trading using opposite Stoneridge and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge 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 Stoneridge 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.