Correlation Between Monro Muffler and ECARX Holdings

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

Diversification Opportunities for Monro Muffler and ECARX Holdings

-0.11

Correlation Coefficient

Monro Muffler  ECARX Holdings

Good diversification

The 3 months correlation between Monro and ECARX is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and ECARX Holdings Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Warrants 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 ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Warrants has no effect on the direction of Monro Muffler i.e., Monro Muffler and ECARX Holdings go up and down completely randomly.

Pair Corralation between Monro Muffler and ECARX Holdings

Given the investment horizon of 90 days Monro Muffler Brake is expected to under-perform the ECARX Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Monro Muffler Brake is 10.63 times less risky than ECARX Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The ECARX Holdings Warrants is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1.50  in ECARX Holdings Warrants on September 20, 2024 and sell it today you would earn a total of  1.50  from holding ECARX Holdings Warrants or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.13%
Values	Daily Returns

Monro Muffler Brake  vs.  ECARX Holdings Warrants

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 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.

ECARX Holdings Warrants

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECARX Holdings Warrants are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ECARX Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monro Muffler and ECARX Holdings

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

The idea behind Monro Muffler Brake and ECARX Holdings Warrants 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.