Correlation Between Thor Industries and Arconic

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

By analyzing existing cross correlation between Thor Industries and Arconic 59 percent, you can compare the effects of market volatilities on Thor Industries and Arconic 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 Arconic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Arconic.

Diversification Opportunities for Thor Industries and Arconic

-0.3

Correlation Coefficient

Thor Industries  Arconic

Very good diversification

The 3 months correlation between Thor and Arconic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Arconic 59 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 59 percent 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic 59 percent has no effect on the direction of Thor Industries i.e., Thor Industries and Arconic go up and down completely randomly.

Pair Corralation between Thor Industries and Arconic

Considering the 90-day investment horizon Thor Industries is expected to under-perform the Arconic. In addition to that, Thor Industries is 8.9 times more volatile than Arconic 59 percent. It trades about -0.1 of its total potential returns per unit of risk. Arconic 59 percent is currently generating about 0.03 per unit of volatility. If you would invest  10,214  in Arconic 59 percent on December 22, 2024 and sell it today you would earn a total of  54.00  from holding Arconic 59 percent or generate 0.53% return on investment over 90 days.

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

Thor Industries  vs.  Arconic 59 percent

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.

Arconic 59 percent

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arconic 59 percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Arconic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thor Industries and Arconic

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

The idea behind Thor Industries and Arconic 59 percent 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.