Correlation Between Thermon Group and Team

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

By analyzing existing cross correlation between Thermon Group Holdings and Team Inc, you can compare the effects of market volatilities on Thermon Group and Team 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 Thermon Group with a short position of Team. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Team.

Diversification Opportunities for Thermon Group and Team

0.11

Correlation Coefficient

Thermon Group  Team

Average diversification

The 3 months correlation between Thermon and Team is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Team Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Inc and Thermon Group 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 Thermon Group Holdings are associated (or correlated) with Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Inc has no effect on the direction of Thermon Group i.e., Thermon Group and Team go up and down completely randomly.

Pair Corralation between Thermon Group and Team

Considering the 90-day investment horizon Thermon Group is expected to generate 3.73 times less return on investment than Team. But when comparing it to its historical volatility, Thermon Group Holdings is 2.75 times less risky than Team. It trades about 0.05 of its potential returns per unit of risk. Team Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,494  in Team Inc on December 25, 2024 and sell it today you would earn a total of  212.00  from holding Team Inc or generate 14.19% return on investment over 90 days.

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

Thermon Group Holdings  vs.  Team Inc

Thermon Group Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, Thermon Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Team Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermon Group and Team

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

The idea behind Thermon Group Holdings and Team Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .