Correlation Between Sypris Solutions and Monro Muffler

Can any of the company-specific risk be diversified away by investing in both Sypris Solutions and Monro Muffler 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 Sypris Solutions and Monro Muffler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sypris Solutions and Monro Muffler Brake, you can compare the effects of market volatilities on Sypris Solutions and Monro Muffler 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 Sypris Solutions with a short position of Monro Muffler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sypris Solutions and Monro Muffler.

Diversification Opportunities for Sypris Solutions and Monro Muffler

-0.34

Correlation Coefficient

Sypris Solutions  Monro Muffler

Very good diversification

The 3 months correlation between Sypris and Monro is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sypris Solutions and Monro Muffler Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monro Muffler Brake and Sypris Solutions 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 Sypris Solutions are associated (or correlated) with Monro Muffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monro Muffler Brake has no effect on the direction of Sypris Solutions i.e., Sypris Solutions and Monro Muffler go up and down completely randomly.

Pair Corralation between Sypris Solutions and Monro Muffler

Given the investment horizon of 90 days Sypris Solutions is expected to generate 2.09 times less return on investment than Monro Muffler. In addition to that, Sypris Solutions is 1.09 times more volatile than Monro Muffler Brake. It trades about 0.03 of its total potential returns per unit of risk. Monro Muffler Brake is currently generating about 0.08 per unit of volatility. If you would invest  2,600  in Monro Muffler Brake on September 4, 2024 and sell it today you would earn a total of  234.00  from holding Monro Muffler Brake or generate 9.0% return on investment over 90 days.

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

Sypris Solutions  vs.  Monro Muffler Brake

Sypris Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sypris Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Sypris Solutions is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Monro Muffler Brake

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monro Muffler Brake are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Monro Muffler may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sypris Solutions and Monro Muffler

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

The idea behind Sypris Solutions and Monro Muffler Brake 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 Transaction History module to view history of all your transactions and understand their impact on performance.