Correlation Between Thor Industries and Brunswick Corp

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

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

Diversification Opportunities for Thor Industries and Brunswick Corp

0.35

Correlation Coefficient

Thor Industries  Brunswick Corp

Weak diversification

The 3 months correlation between Thor and Brunswick is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Thor Industries 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 Thor Industries are associated (or correlated) with Brunswick Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Corp has no effect on the direction of Thor Industries i.e., Thor Industries and Brunswick Corp go up and down completely randomly.

Pair Corralation between Thor Industries and Brunswick Corp

Considering the 90-day investment horizon Thor Industries is expected to generate 4.31 times more return on investment than Brunswick Corp. However, Thor Industries is 4.31 times more volatile than Brunswick Corp. It trades about 0.06 of its potential returns per unit of risk. Brunswick Corp is currently generating about 0.11 per unit of risk. If you would invest  10,470  in Thor Industries on September 2, 2024 and sell it today you would earn a total of  690.00  from holding Thor Industries or generate 6.59% return on investment over 90 days.

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

Thor Industries  vs.  Brunswick Corp

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.

Brunswick Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brunswick Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thor Industries and Brunswick Corp

The main advantage of trading using opposite Thor Industries and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Brunswick Corp 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 Brunswick Corp will offset losses from the drop in Brunswick Corp's long position.

The idea behind Thor Industries and Brunswick Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.