Correlation Between Miller Industries and Dorman Products
Can any of the company-specific risk be diversified away by investing in both Miller Industries and Dorman Products 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 Dorman Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Industries and Dorman Products, you can compare the effects of market volatilities on Miller Industries and Dorman Products 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 Dorman Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and Dorman Products.
Diversification Opportunities for Miller Industries and Dorman Products
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Miller and Dorman is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products 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 Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of Miller Industries i.e., Miller Industries and Dorman Products go up and down completely randomly.
Pair Corralation between Miller Industries and Dorman Products
Considering the 90-day investment horizon Miller Industries is expected to generate 0.84 times more return on investment than Dorman Products. However, Miller Industries is 1.19 times less risky than Dorman Products. It trades about 0.16 of its potential returns per unit of risk. Dorman Products is currently generating about 0.04 per unit of risk. If you would invest 4,038 in Miller Industries on January 24, 2024 and sell it today you would earn a total of 946.00 from holding Miller Industries or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Miller Industries vs. Dorman Products
Performance |
| Timeline |
| Miller Industries |
| Dorman Products |
Miller Industries and Dorman Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Industries and Dorman Products
The main advantage of trading using opposite Miller Industries and Dorman Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, Dorman Products 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 Dorman Products will offset losses from the drop in Dorman Products' long position.| Miller Industries vs. Gentex | Miller Industries vs. Adient PLC | Miller Industries vs. Autoliv | Miller Industries vs. Fox Factory Holding |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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