Correlation Between Brunswick Corp and Thor Industries

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

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

Diversification Opportunities for Brunswick Corp and Thor Industries

0.24

Correlation Coefficient

Brunswick Corp  Thor Industries

Modest diversification

The 3 months correlation between Brunswick and Thor is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick Corp and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Brunswick Corp 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 Brunswick 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 Brunswick Corp i.e., Brunswick Corp and Thor Industries go up and down completely randomly.

Pair Corralation between Brunswick Corp and Thor Industries

Assuming the 90 days horizon Brunswick Corp is expected to generate 2.48 times less return on investment than Thor Industries. But when comparing it to its historical volatility, Brunswick Corp is 3.75 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 of returns per unit of risk over similar time horizon. If you would invest  10,470  in Thor Industries on September 3, 2024 and sell it today you would earn a total of  690.00  from holding Thor Industries or generate 6.59% return on investment over 90 days.

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

Brunswick Corp  vs.  Thor Industries

Brunswick Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brunswick Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thor Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Thor Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brunswick Corp and Thor Industries

The main advantage of trading using opposite Brunswick Corp and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick Corp 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 Brunswick 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.