Correlation Between Monro Muffler and Sypris Solutions

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

Diversification Opportunities for Monro Muffler and Sypris Solutions

0.59

Correlation Coefficient

Monro Muffler  Sypris Solutions

Very weak diversification

The 3 months correlation between Monro and Sypris is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Sypris Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sypris Solutions 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 Sypris Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sypris Solutions has no effect on the direction of Monro Muffler i.e., Monro Muffler and Sypris Solutions go up and down completely randomly.

Pair Corralation between Monro Muffler and Sypris Solutions

Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the Sypris Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Monro Muffler Brake is 4.12 times less risky than Sypris Solutions. The stock trades about -0.26 of its potential returns per unit of risk. The Sypris Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Sypris Solutions on December 28, 2024 and sell it today you would lose (28.00) from holding Sypris Solutions or give up 14.74% of portfolio value over 90 days.

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

Monro Muffler Brake  vs.  Sypris Solutions

Monro Muffler Brake

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monro Muffler Brake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sypris Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sypris Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, Sypris Solutions may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Monro Muffler and Sypris Solutions

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

The idea behind Monro Muffler Brake and Sypris Solutions 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.