Correlation Between US Global and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and Modine Manufacturing, you can compare the effects of market volatilities on US Global 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 US Global with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Modine Manufacturing.
Diversification Opportunities for US Global and Modine Manufacturing
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GROW and Modine is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and US Global 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 US Global Investors 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 US Global i.e., US Global and Modine Manufacturing go up and down completely randomly.
Pair Corralation between US Global and Modine Manufacturing
Given the investment horizon of 90 days US Global is expected to generate 3.63 times less return on investment than Modine Manufacturing. But when comparing it to its historical volatility, US Global Investors is 2.9 times less risky than Modine Manufacturing. It trades about 0.06 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 13,106 in Modine Manufacturing on August 27, 2024 and sell it today you would earn a total of 634.00 from holding Modine Manufacturing or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Investors vs. Modine Manufacturing
Performance |
| Timeline |
| US Global Investors |
| Modine Manufacturing |
US Global and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Modine Manufacturing
The main advantage of trading using opposite US Global and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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