Correlation Between Gentherm and Monro Muffler
Can any of the company-specific risk be diversified away by investing in both Gentherm and Monro Muffler 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 Gentherm and Monro Muffler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Monro Muffler Brake, you can compare the effects of market volatilities on Gentherm and Monro Muffler 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 Gentherm with a short position of Monro Muffler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Monro Muffler.
Diversification Opportunities for Gentherm and Monro Muffler
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gentherm and Monro is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Monro Muffler Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monro Muffler Brake and Gentherm 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 Gentherm are associated (or correlated) with Monro Muffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monro Muffler Brake has no effect on the direction of Gentherm i.e., Gentherm and Monro Muffler go up and down completely randomly.
Pair Corralation between Gentherm and Monro Muffler
Given the investment horizon of 90 days Gentherm is expected to under-perform the Monro Muffler. But the stock apears to be less risky and, when comparing its historical volatility, Gentherm is 1.11 times less risky than Monro Muffler. The stock trades about 0.0 of its potential returns per unit of risk. The Monro Muffler Brake is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,833 in Monro Muffler Brake on August 24, 2024 and sell it today you would lose (160.00) from holding Monro Muffler Brake or give up 5.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentherm vs. Monro Muffler Brake
Performance |
| Timeline |
| Gentherm |
| Monro Muffler Brake |
Gentherm and Monro Muffler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentherm and Monro Muffler
The main advantage of trading using opposite Gentherm and Monro Muffler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Monro Muffler 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 Monro Muffler will offset losses from the drop in Monro Muffler's long position.| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |