Correlation Between Aldel Financial and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Modine Manufacturing 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 Aldel Financial and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Modine Manufacturing, you can compare the effects of market volatilities on Aldel Financial and Modine Manufacturing 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 Aldel Financial with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Modine Manufacturing.
Diversification Opportunities for Aldel Financial and Modine Manufacturing
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aldel and Modine is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of Aldel Financial i.e., Aldel Financial and Modine Manufacturing go up and down completely randomly.
Pair Corralation between Aldel Financial and Modine Manufacturing
Assuming the 90 days horizon Aldel Financial is expected to generate 86.79 times less return on investment than Modine Manufacturing. But when comparing it to its historical volatility, Aldel Financial II is 38.96 times less risky than Modine Manufacturing. It trades about 0.03 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,713 in Modine Manufacturing on September 4, 2024 and sell it today you would earn a total of 4,061 from holding Modine Manufacturing or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 17.96% |
| Values | Daily Returns |
Aldel Financial II vs. Modine Manufacturing
Performance |
| Timeline |
| Aldel Financial II |
| Modine Manufacturing |
Aldel Financial and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Modine Manufacturing
The main advantage of trading using opposite Aldel Financial and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| Aldel Financial vs. Saia Inc | Aldel Financial vs. The Gap, | Aldel Financial vs. Summit Materials | Aldel Financial vs. Barrick Gold Corp |
| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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