Correlation Between Miller Industries and Valeo SE

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

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

Diversification Opportunities for Miller Industries and Valeo SE

-0.69

Correlation Coefficient

Miller Industries  Valeo SE

Excellent diversification

The 3 months correlation between Miller and Valeo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Valeo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo SE 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 Valeo SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SE has no effect on the direction of Miller Industries i.e., Miller Industries and Valeo SE go up and down completely randomly.

Pair Corralation between Miller Industries and Valeo SE

Considering the 90-day investment horizon Miller Industries is expected to generate 0.48 times more return on investment than Valeo SE. However, Miller Industries is 2.08 times less risky than Valeo SE. It trades about 0.11 of its potential returns per unit of risk. Valeo SE is currently generating about -0.03 per unit of risk. If you would invest  2,565  in Miller Industries on September 23, 2024 and sell it today you would earn a total of  4,139  from holding Miller Industries or generate 161.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	63.58%
Values	Daily Returns

Miller Industries  vs.  Valeo SE

Miller Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Industries are ranked lower than 5 (%) 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 January 2025.

Valeo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Miller Industries and Valeo SE

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

The idea behind Miller Industries and Valeo SE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.