Correlation Between Black Hills and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both Black Hills 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 Black Hills and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Modine Manufacturing, you can compare the effects of market volatilities on Black Hills 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 Black Hills with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Modine Manufacturing.
Diversification Opportunities for Black Hills and Modine Manufacturing
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Black and Modine is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Black Hills 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 Black Hills 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 Black Hills i.e., Black Hills and Modine Manufacturing go up and down completely randomly.
Pair Corralation between Black Hills and Modine Manufacturing
Considering the 90-day investment horizon Black Hills is expected to generate 32.19 times less return on investment than Modine Manufacturing. But when comparing it to its historical volatility, Black Hills is 3.05 times less risky than Modine Manufacturing. It trades about 0.01 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,064 in Modine Manufacturing on January 12, 2025 and sell it today you would earn a total of 5,601 from holding Modine Manufacturing or generate 271.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Modine Manufacturing
Performance |
| Timeline |
| Black Hills |
| Modine Manufacturing |
Black Hills and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Modine Manufacturing
The main advantage of trading using opposite Black Hills and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills 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.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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