Correlation Between Monro Muffler and Miller Industries
Can any of the company-specific risk be diversified away by investing in both Monro Muffler 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 Monro Muffler and Miller Industries 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 Miller Industries, you can compare the effects of market volatilities on Monro Muffler 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 Monro Muffler with a short position of Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monro Muffler and Miller Industries.
Diversification Opportunities for Monro Muffler and Miller Industries
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monro and Miller is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 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 Monro Muffler i.e., Monro Muffler and Miller Industries go up and down completely randomly.
Pair Corralation between Monro Muffler and Miller Industries
Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the Miller Industries. In addition to that, Monro Muffler is 1.71 times more volatile than Miller Industries. It trades about -0.25 of its total potential returns per unit of risk. Miller Industries is currently generating about -0.4 per unit of volatility. If you would invest 6,753 in Miller Industries on November 29, 2024 and sell it today you would lose (920.00) from holding Miller Industries or give up 13.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monro Muffler Brake vs. Miller Industries
Performance |
| Timeline |
| Monro Muffler Brake |
| Miller Industries |
Monro Muffler and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monro Muffler and Miller Industries
The main advantage of trading using opposite Monro Muffler and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monro Muffler 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.| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler vs. Douglas Dynamics |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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