Correlation Between Stellantis and Thor Industries

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

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

Diversification Opportunities for Stellantis and Thor Industries

-0.46

Correlation Coefficient

Stellantis  Thor Industries

Very good diversification

The 3 months correlation between Stellantis and Thor is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Stellantis 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 Stellantis NV 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 Stellantis i.e., Stellantis and Thor Industries go up and down completely randomly.

Pair Corralation between Stellantis and Thor Industries

Given the investment horizon of 90 days Stellantis NV is expected to generate 1.69 times more return on investment than Thor Industries. However, Stellantis is 1.69 times more volatile than Thor Industries. It trades about 0.0 of its potential returns per unit of risk. Thor Industries is currently generating about -0.22 per unit of risk. If you would invest  1,339  in Stellantis NV on September 17, 2024 and sell it today you would lose (12.00) from holding Stellantis NV or give up 0.9% of portfolio value over 90 days.

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

Stellantis NV  vs.  Thor Industries

Stellantis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Thor Industries

Risk-Adjusted Performance

0 of 100

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 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 Stellantis and Thor Industries

The main advantage of trading using opposite Stellantis and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis 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 Stellantis NV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.