Correlation Between Monro Muffler and Holley
Can any of the company-specific risk be diversified away by investing in both Monro Muffler and Holley 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 Monro Muffler and Holley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monro Muffler Brake and Holley Inc, you can compare the effects of market volatilities on Monro Muffler and Holley 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 Monro Muffler with a short position of Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monro Muffler and Holley.
Diversification Opportunities for Monro Muffler and Holley
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monro and Holley is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley Inc and Monro Muffler 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 Monro Muffler Brake are associated (or correlated) with Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Monro Muffler i.e., Monro Muffler and Holley go up and down completely randomly.
Pair Corralation between Monro Muffler and Holley
Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the Holley. But the stock apears to be less risky and, when comparing its historical volatility, Monro Muffler Brake is 1.96 times less risky than Holley. The stock trades about -0.03 of its potential returns per unit of risk. The Holley Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 272.00 in Holley Inc on August 23, 2024 and sell it today you would earn a total of 2.00 from holding Holley Inc or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monro Muffler Brake vs. Holley Inc
Performance |
| Timeline |
| Monro Muffler Brake |
| Holley Inc |
Monro Muffler and Holley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monro Muffler and Holley
The main advantage of trading using opposite Monro Muffler and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monro Muffler position performs unexpectedly, Holley 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 Holley will offset losses from the drop in Holley's long position.| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler vs. Douglas Dynamics |
| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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