Correlation Between Monro Muffler and Continental

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

Diversification Opportunities for Monro Muffler and Continental

-0.42

Correlation Coefficient

Monro Muffler  Continental

Very good diversification

The 3 months correlation between Monro and Continental is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Monro Muffler Brake and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Monro Muffler i.e., Monro Muffler and Continental go up and down completely randomly.

Pair Corralation between Monro Muffler and Continental

Given the investment horizon of 90 days Monro Muffler Brake is expected to generate 1.28 times more return on investment than Continental. However, Monro Muffler is 1.28 times more volatile than Caleres. It trades about 0.04 of its potential returns per unit of risk. Caleres is currently generating about -0.02 per unit of risk. If you would invest  1,352  in Monro Muffler Brake on May 5, 2025 and sell it today you would earn a total of  57.00  from holding Monro Muffler Brake or generate 4.22% 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.  Caleres

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.

Continental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Monro Muffler and Continental

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

The idea behind Monro Muffler Brake and Caleres 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.