Correlation Between Miller Industries and Superior Industries
Can any of the company-specific risk be diversified away by investing in both Miller Industries and Superior 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 Miller Industries and Superior Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Industries and Superior Industries International, you can compare the effects of market volatilities on Miller Industries and Superior 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 Miller Industries with a short position of Superior Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and Superior Industries.
Diversification Opportunities for Miller Industries and Superior Industries
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Miller and Superior is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Miller Industries i.e., Miller Industries and Superior Industries go up and down completely randomly.
Pair Corralation between Miller Industries and Superior Industries
Considering the 90-day investment horizon Miller Industries is expected to under-perform the Superior Industries. But the stock apears to be less risky and, when comparing its historical volatility, Miller Industries is 2.87 times less risky than Superior Industries. The stock trades about -0.22 of its potential returns per unit of risk. The Superior Industries International is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 206.00 in Superior Industries International on November 18, 2024 and sell it today you would lose (10.00) from holding Superior Industries International or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miller Industries vs. Superior Industries Internatio
Performance |
| Timeline |
| Miller Industries |
| Superior Industries |
Miller Industries and Superior Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Industries and Superior Industries
The main advantage of trading using opposite Miller Industries and Superior Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, Superior 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 Superior Industries will offset losses from the drop in Superior Industries' long position.| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
| Superior Industries vs. Monro Muffler Brake | Superior Industries vs. Dorman Products | Superior Industries vs. Motorcar Parts of | Superior Industries vs. Gentherm |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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