Correlation Between Thor Industries and GEN Restaurant

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

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

Diversification Opportunities for Thor Industries and GEN Restaurant

0.61

Correlation Coefficient

Thor Industries  GEN Restaurant

Poor diversification

The 3 months correlation between Thor and GEN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Thor Industries i.e., Thor Industries and GEN Restaurant go up and down completely randomly.

Pair Corralation between Thor Industries and GEN Restaurant

Considering the 90-day investment horizon Thor Industries is expected to generate 0.56 times more return on investment than GEN Restaurant. However, Thor Industries is 1.8 times less risky than GEN Restaurant. It trades about -0.01 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.01 per unit of risk. If you would invest  10,117  in Thor Industries on October 12, 2024 and sell it today you would lose (594.00) from holding Thor Industries or give up 5.87% of portfolio value over 90 days.

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

Thor Industries  vs.  GEN Restaurant Group,

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 weak performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thor Industries and GEN Restaurant

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

The idea behind Thor Industries and GEN Restaurant Group, 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.