Correlation Between Dana and Monro Muffler

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

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

Diversification Opportunities for Dana and Monro Muffler

0.47

Correlation Coefficient

Dana  Monro Muffler

Very weak diversification

The 3 months correlation between Dana and Monro is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc 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 Dana 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 Dana Inc 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 Dana i.e., Dana and Monro Muffler go up and down completely randomly.

Pair Corralation between Dana and Monro Muffler

Considering the 90-day investment horizon Dana is expected to generate 2.12 times less return on investment than Monro Muffler. But when comparing it to its historical volatility, Dana Inc is 3.17 times less risky than Monro Muffler. It trades about 0.07 of its potential returns per unit of risk. Monro Muffler Brake is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,311  in Monro Muffler Brake on May 6, 2025 and sell it today you would earn a total of  101.00  from holding Monro Muffler Brake or generate 7.7% return on investment over 90 days.

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

Dana Inc  vs.  Monro Muffler Brake

Dana Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Monro Muffler Brake

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monro Muffler Brake are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Monro Muffler displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dana and Monro Muffler

The main advantage of trading using opposite Dana and Monro Muffler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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 Dana Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.