Correlation Between Thor Industries and Ree Automotive

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

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

Diversification Opportunities for Thor Industries and Ree Automotive

0.64

Correlation Coefficient

Thor Industries  Ree Automotive

Poor diversification

The 3 months correlation between Thor and Ree is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding 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 Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of Thor Industries i.e., Thor Industries and Ree Automotive go up and down completely randomly.

Pair Corralation between Thor Industries and Ree Automotive

Considering the 90-day investment horizon Thor Industries is expected to generate 0.47 times more return on investment than Ree Automotive. However, Thor Industries is 2.15 times less risky than Ree Automotive. It trades about -0.08 of its potential returns per unit of risk. Ree Automotive Holding is currently generating about -0.22 per unit of risk. If you would invest  9,488  in Thor Industries on December 27, 2024 and sell it today you would lose (1,486) from holding Thor Industries or give up 15.66% 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.  Ree Automotive Holding

Thor Industries

Risk-Adjusted Performance

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ree Automotive Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ree Automotive Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Thor Industries and Ree Automotive

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

The idea behind Thor Industries and Ree Automotive Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.