Correlation Between Thor Industries and EMERA

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

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

Diversification Opportunities for Thor Industries and EMERA

0.37

Correlation Coefficient

Thor Industries  EMERA

Weak diversification

The 3 months correlation between Thor and EMERA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and EMERA FIN LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERA FIN LP 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 EMERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERA FIN LP has no effect on the direction of Thor Industries i.e., Thor Industries and EMERA go up and down completely randomly.

Pair Corralation between Thor Industries and EMERA

Considering the 90-day investment horizon Thor Industries is expected to generate 2.64 times more return on investment than EMERA. However, Thor Industries is 2.64 times more volatile than EMERA FIN LP. It trades about 0.01 of its potential returns per unit of risk. EMERA FIN LP is currently generating about -0.1 per unit of risk. If you would invest  10,368  in Thor Industries on October 24, 2024 and sell it today you would lose (6.00) from holding Thor Industries or give up 0.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Thor Industries  vs.  EMERA FIN LP

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.

EMERA FIN LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMERA FIN LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EMERA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thor Industries and EMERA

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

The idea behind Thor Industries and EMERA FIN LP 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.