Correlation Between Monro Muffler and Innoviz Technologies

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

Diversification Opportunities for Monro Muffler and Innoviz Technologies

0.67

Correlation Coefficient

Monro Muffler  Innoviz Technologies

Poor diversification

The 3 months correlation between Monro and Innoviz is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies 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 Innoviz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviz Technologies has no effect on the direction of Monro Muffler i.e., Monro Muffler and Innoviz Technologies go up and down completely randomly.

Pair Corralation between Monro Muffler and Innoviz Technologies

Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the Innoviz Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Monro Muffler Brake is 1.6 times less risky than Innoviz Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Innoviz Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Innoviz Technologies on March 1, 2024 and sell it today you would lose (4.00) from holding Innoviz Technologies or give up 3.48% of portfolio value over 90 days.

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

Monro Muffler Brake  vs.  Innoviz Technologies

Monro Muffler Brake

Risk-Adjusted Performance

0 of 100

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 June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Innoviz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innoviz Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Monro Muffler and Innoviz Technologies

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

The idea behind Monro Muffler Brake and Innoviz Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.