Correlation Between Miller Industries and Commercial Vehicle

Can any of the company-specific risk be diversified away by investing in both Miller Industries and Commercial Vehicle 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 Commercial Vehicle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Miller Industries and Commercial Vehicle Group, you can compare the effects of market volatilities on Miller Industries and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and Commercial Vehicle.

Diversification Opportunities for Miller Industries and Commercial Vehicle

0.75

Correlation Coefficient

Miller Industries  Commercial Vehicle

Poor diversification

The 3 months correlation between Miller and Commercial is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Miller Industries i.e., Miller Industries and Commercial Vehicle go up and down completely randomly.

Pair Corralation between Miller Industries and Commercial Vehicle

Considering the 90-day investment horizon Miller Industries is expected to under-perform the Commercial Vehicle. But the stock apears to be less risky and, when comparing its historical volatility, Miller Industries is 2.49 times less risky than Commercial Vehicle. The stock trades about -0.48 of its potential returns per unit of risk. The Commercial Vehicle Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Commercial Vehicle Group on December 1, 2024 and sell it today you would lose (10.00) from holding Commercial Vehicle Group or give up 4.59% 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.  Commercial Vehicle Group

Miller Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Miller Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Commercial Vehicle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Miller Industries and Commercial Vehicle

The main advantage of trading using opposite Miller Industries and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.

The idea behind Miller Industries and Commercial Vehicle Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.