Correlation Between Miller Industries and Allison Transmission
Can any of the company-specific risk be diversified away by investing in both Miller Industries and Allison Transmission 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 Miller Industries and Allison Transmission into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Industries and Allison Transmission Holdings, you can compare the effects of market volatilities on Miller Industries and Allison Transmission 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 Miller Industries with a short position of Allison Transmission. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and Allison Transmission.
Diversification Opportunities for Miller Industries and Allison Transmission
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Miller and Allison is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Allison Transmission Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission and Miller Industries 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 Miller Industries are associated (or correlated) with Allison Transmission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission has no effect on the direction of Miller Industries i.e., Miller Industries and Allison Transmission go up and down completely randomly.
Pair Corralation between Miller Industries and Allison Transmission
Considering the 90-day investment horizon Miller Industries is expected to generate 1.16 times less return on investment than Allison Transmission. In addition to that, Miller Industries is 1.46 times more volatile than Allison Transmission Holdings. It trades about 0.16 of its total potential returns per unit of risk. Allison Transmission Holdings is currently generating about 0.27 per unit of volatility. If you would invest 8,889 in Allison Transmission Holdings on September 2, 2024 and sell it today you would earn a total of 2,961 from holding Allison Transmission Holdings or generate 33.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miller Industries vs. Allison Transmission Holdings
Performance |
| Timeline |
| Miller Industries |
| Allison Transmission |
Miller Industries and Allison Transmission Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Industries and Allison Transmission
The main advantage of trading using opposite Miller Industries and Allison Transmission positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, Allison Transmission 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 Allison Transmission will offset losses from the drop in Allison Transmission's long position.| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory Holding |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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