Correlation Between Advanced Drainage and Mueller Industries

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

By analyzing existing cross correlation between Advanced Drainage Systems and Mueller Industries, you can compare the effects of market volatilities on Advanced Drainage and Mueller Industries 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 Advanced Drainage with a short position of Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Drainage and Mueller Industries.

Diversification Opportunities for Advanced Drainage and Mueller Industries

0.06

Correlation Coefficient

Advanced Drainage  Mueller Industries

Significant diversification

The 3 months correlation between Advanced and Mueller is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Drainage Systems and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries and Advanced Drainage 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 Advanced Drainage Systems are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Advanced Drainage i.e., Advanced Drainage and Mueller Industries go up and down completely randomly.

Pair Corralation between Advanced Drainage and Mueller Industries

Considering the 90-day investment horizon Advanced Drainage is expected to generate 5.82 times less return on investment than Mueller Industries. In addition to that, Advanced Drainage is 1.83 times more volatile than Mueller Industries. It trades about 0.02 of its total potential returns per unit of risk. Mueller Industries is currently generating about 0.21 per unit of volatility. If you would invest  9,043  in Mueller Industries on August 21, 2025 and sell it today you would earn a total of  1,638  from holding Mueller Industries or generate 18.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Advanced Drainage Systems  vs.  Mueller Industries

Advanced Drainage Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Advanced Drainage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mueller Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mueller Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Mueller Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Drainage and Mueller Industries

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

The idea behind Advanced Drainage Systems and Mueller Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.