Correlation Between Miller Industries and Dana

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

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

Diversification Opportunities for Miller Industries and Dana

0.02

Correlation Coefficient

Miller Industries  Dana

Significant diversification

The 3 months correlation between Miller and Dana is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Miller Industries i.e., Miller Industries and Dana go up and down completely randomly.

Pair Corralation between Miller Industries and Dana

Considering the 90-day investment horizon Miller Industries is expected to generate 0.74 times more return on investment than Dana. However, Miller Industries is 1.34 times less risky than Dana. It trades about 0.1 of its potential returns per unit of risk. Dana Inc is currently generating about 0.0 per unit of risk. If you would invest  3,852  in Miller Industries on October 6, 2024 and sell it today you would earn a total of  2,835  from holding Miller Industries or generate 73.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Miller Industries  vs.  Dana Inc

Miller Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, Miller Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dana Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Miller Industries and Dana

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

The idea behind Miller Industries and Dana Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.