Correlation Between SOUTHERN and Thor Industries

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

By analyzing existing cross correlation between SOUTHERN PER CORP and Thor Industries, you can compare the effects of market volatilities on SOUTHERN and Thor Industries 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 SOUTHERN with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHERN and Thor Industries.

Diversification Opportunities for SOUTHERN and Thor Industries

0.47

Correlation Coefficient

SOUTHERN  Thor Industries

Very weak diversification

The 3 months correlation between SOUTHERN and Thor is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and SOUTHERN 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 SOUTHERN PER CORP are associated (or correlated) with Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of SOUTHERN i.e., SOUTHERN and Thor Industries go up and down completely randomly.

Pair Corralation between SOUTHERN and Thor Industries

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to generate 0.16 times more return on investment than Thor Industries. However, SOUTHERN PER CORP is 6.23 times less risky than Thor Industries. It trades about -0.08 of its potential returns per unit of risk. Thor Industries is currently generating about -0.06 per unit of risk. If you would invest  9,921  in SOUTHERN PER CORP on October 10, 2024 and sell it today you would lose (152.00) from holding SOUTHERN PER CORP or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Thor Industries

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with SOUTHERN and Thor Industries

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

The idea behind SOUTHERN PER CORP and Thor Industries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.