Correlation Between Monro Muffler and Superior Industries

Can any of the company-specific risk be diversified away by investing in both Monro Muffler and Superior Industries 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 Superior Industries 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 Superior Industries International, you can compare the effects of market volatilities on Monro Muffler and Superior Industries 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 Superior Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monro Muffler and Superior Industries.

Diversification Opportunities for Monro Muffler and Superior Industries

-0.41

Correlation Coefficient

Monro Muffler  Superior Industries

Very good diversification

The 3 months correlation between Monro and Superior is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Monro Muffler i.e., Monro Muffler and Superior Industries go up and down completely randomly.

Pair Corralation between Monro Muffler and Superior Industries

Given the investment horizon of 90 days Monro Muffler Brake is expected to generate 0.64 times more return on investment than Superior Industries. However, Monro Muffler Brake is 1.56 times less risky than Superior Industries. It trades about 0.11 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.19 per unit of risk. If you would invest  2,679  in Monro Muffler Brake on August 30, 2024 and sell it today you would earn a total of  142.00  from holding Monro Muffler Brake or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Monro Muffler Brake  vs.  Superior Industries Internatio

Monro Muffler Brake

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monro Muffler Brake are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Monro Muffler is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Superior Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Industries International 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 basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Monro Muffler and Superior Industries

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

The idea behind Monro Muffler Brake and Superior Industries International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.