Correlation Between Brunswick and Thor Industries

Can any of the company-specific risk be diversified away by investing in both Brunswick 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 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 and Thor Industries, you can compare the effects of market volatilities on Brunswick 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 with a short position of Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Thor Industries.

Diversification Opportunities for Brunswick and Thor Industries

0.72

Correlation Coefficient

Brunswick  Thor Industries

Poor diversification

The 3 months correlation between Brunswick and Thor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and Brunswick 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 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 i.e., Brunswick and Thor Industries go up and down completely randomly.

Pair Corralation between Brunswick and Thor Industries

Allowing for the 90-day total investment horizon Brunswick is expected to generate 1.31 times less return on investment than Thor Industries. But when comparing it to its historical volatility, Brunswick is 1.09 times less risky than Thor Industries. It trades about 0.05 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 2, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Brunswick  vs.  Thor Industries

Brunswick

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Brunswick is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unfluctuating 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 and Thor Industries

The main advantage of trading using opposite Brunswick and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.