Correlation Between Lotus Technology and Miller Industries
Can any of the company-specific risk be diversified away by investing in both Lotus Technology and Miller 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 Lotus Technology and Miller Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Technology American and Miller Industries, you can compare the effects of market volatilities on Lotus Technology and Miller 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 Lotus Technology with a short position of Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Technology and Miller Industries.
Diversification Opportunities for Lotus Technology and Miller Industries
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotus and Miller is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Technology American and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries and Lotus Technology 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 Lotus Technology American are associated (or correlated) with Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of Lotus Technology i.e., Lotus Technology and Miller Industries go up and down completely randomly.
Pair Corralation between Lotus Technology and Miller Industries
Considering the 90-day investment horizon Lotus Technology American is expected to under-perform the Miller Industries. In addition to that, Lotus Technology is 2.15 times more volatile than Miller Industries. It trades about -0.04 of its total potential returns per unit of risk. Miller Industries is currently generating about 0.09 per unit of volatility. If you would invest 2,692 in Miller Industries on November 19, 2024 and sell it today you would earn a total of 3,588 from holding Miller Industries or generate 133.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Technology American vs. Miller Industries
Performance |
| Timeline |
| Lotus Technology American |
| Miller Industries |
Lotus Technology and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Technology and Miller Industries
The main advantage of trading using opposite Lotus Technology and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Technology position performs unexpectedly, Miller 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 Miller Industries will offset losses from the drop in Miller Industries' long position.| Lotus Technology vs. Procter Gamble | Lotus Technology vs. National Vision Holdings | Lotus Technology vs. Steven Madden | Lotus Technology vs. 1 800 FLOWERSCOM |
| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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