Correlation Between Monro Muffler and Gentherm
Can any of the company-specific risk be diversified away by investing in both Monro Muffler and Gentherm 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 Gentherm 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 Gentherm, you can compare the effects of market volatilities on Monro Muffler and Gentherm 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 Gentherm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monro Muffler and Gentherm.
Diversification Opportunities for Monro Muffler and Gentherm
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monro and Gentherm is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Gentherm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentherm 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 Gentherm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentherm has no effect on the direction of Monro Muffler i.e., Monro Muffler and Gentherm go up and down completely randomly.
Pair Corralation between Monro Muffler and Gentherm
Given the investment horizon of 90 days Monro Muffler Brake is expected to generate 0.96 times more return on investment than Gentherm. However, Monro Muffler Brake is 1.04 times less risky than Gentherm. It trades about -0.03 of its potential returns per unit of risk. Gentherm is currently generating about -0.03 per unit of risk. If you would invest 4,441 in Monro Muffler Brake on August 24, 2024 and sell it today you would lose (1,768) from holding Monro Muffler Brake or give up 39.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monro Muffler Brake vs. Gentherm
Performance |
| Timeline |
| Monro Muffler Brake |
| Gentherm |
Monro Muffler and Gentherm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monro Muffler and Gentherm
The main advantage of trading using opposite Monro Muffler and Gentherm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monro Muffler position performs unexpectedly, Gentherm 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 Gentherm will offset losses from the drop in Gentherm's long position.| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler vs. Douglas Dynamics |
| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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