Correlation Between Miller Industries and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Miller Industries and Fox Factory 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 Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Industries and Fox Factory Holding, you can compare the effects of market volatilities on Miller Industries and Fox Factory 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 Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and Fox Factory.
Diversification Opportunities for Miller Industries and Fox Factory
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Miller and Fox is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding 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 Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Miller Industries i.e., Miller Industries and Fox Factory go up and down completely randomly.
Pair Corralation between Miller Industries and Fox Factory
Considering the 90-day investment horizon Miller Industries is expected to generate 1.3 times more return on investment than Fox Factory. However, Miller Industries is 1.3 times more volatile than Fox Factory Holding. It trades about 0.14 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.22 per unit of risk. If you would invest 6,767 in Miller Industries on August 30, 2024 and sell it today you would earn a total of 705.00 from holding Miller Industries or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miller Industries vs. Fox Factory Holding
Performance |
| Timeline |
| Miller Industries |
| Fox Factory Holding |
Miller Industries and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Industries and Fox Factory
The main advantage of trading using opposite Miller Industries and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory'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 |
| Fox Factory vs. Ford Motor | Fox Factory vs. General Motors | Fox Factory vs. Goodyear Tire Rubber | Fox Factory vs. Li Auto |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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