Correlation Between Monro Muffler and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Monro Muffler and Johnson Controls 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 Johnson Controls 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 Johnson Controls International, you can compare the effects of market volatilities on Monro Muffler and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monro Muffler and Johnson Controls.
Diversification Opportunities for Monro Muffler and Johnson Controls
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monro and Johnson is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Monro Muffler i.e., Monro Muffler and Johnson Controls go up and down completely randomly.
Pair Corralation between Monro Muffler and Johnson Controls
Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the Johnson Controls. In addition to that, Monro Muffler is 2.09 times more volatile than Johnson Controls International. It trades about -0.06 of its total potential returns per unit of risk. Johnson Controls International is currently generating about 0.05 per unit of volatility. If you would invest 6,410 in Johnson Controls International on January 26, 2024 and sell it today you would earn a total of 51.00 from holding Johnson Controls International or generate 0.8% 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. Johnson Controls International
Performance |
| Timeline |
| Monro Muffler Brake |
| Johnson Controls Int |
Monro Muffler and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monro Muffler and Johnson Controls
The main advantage of trading using opposite Monro Muffler and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monro Muffler position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Monro Muffler vs. Motorcar Parts of | Monro Muffler vs. Standard Motor Products | Monro Muffler vs. Stoneridge | Monro Muffler vs. Douglas Dynamics |
| Johnson Controls vs. Carrier GlobalCorp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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