Correlation Between MYR and Thor Industries

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

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

Diversification Opportunities for MYR and Thor Industries

-0.13

Correlation Coefficient

MYR  Thor Industries

Good diversification

The 3 months correlation between MYR and Thor is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries and MYR 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 MYR Group 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 MYR i.e., MYR and Thor Industries go up and down completely randomly.

Pair Corralation between MYR and Thor Industries

Given the investment horizon of 90 days MYR Group is expected to generate 1.62 times more return on investment than Thor Industries. However, MYR is 1.62 times more volatile than Thor Industries. It trades about 0.05 of its potential returns per unit of risk. Thor Industries is currently generating about 0.03 per unit of risk. If you would invest  13,290  in MYR Group on September 27, 2024 and sell it today you would earn a total of  1,940  from holding MYR Group or generate 14.6% return on investment over 90 days.

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

MYR Group  vs.  Thor Industries

MYR Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

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 MYR and Thor Industries

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