Correlation Between Modine Manufacturing and Penn National
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Penn National 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 Modine Manufacturing and Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Penn National Gaming, you can compare the effects of market volatilities on Modine Manufacturing and Penn National 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 Modine Manufacturing with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Penn National.
Diversification Opportunities for Modine Manufacturing and Penn National
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Penn is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and Modine Manufacturing 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 Modine Manufacturing are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Penn National go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Penn National
Assuming the 90 days horizon Modine Manufacturing is expected to generate 0.6 times more return on investment than Penn National. However, Modine Manufacturing is 1.66 times less risky than Penn National. It trades about 0.35 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.17 per unit of risk. If you would invest 11,415 in Modine Manufacturing on October 20, 2024 and sell it today you would earn a total of 1,445 from holding Modine Manufacturing or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Penn National Gaming
Performance |
| Timeline |
| Modine Manufacturing |
| Penn National Gaming |
Modine Manufacturing and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Penn National
The main advantage of trading using opposite Modine Manufacturing and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Modine Manufacturing vs. INDO RAMA SYNTHETIC | Modine Manufacturing vs. ENVVENO MEDICAL DL 00001 | Modine Manufacturing vs. Sinopec Shanghai Petrochemical | Modine Manufacturing vs. PEPTONIC MEDICAL |
| Penn National vs. BANKINTER ADR 2007 | Penn National vs. GEELY AUTOMOBILE | Penn National vs. Cincinnati Financial Corp | Penn National vs. Highlight Communications AG |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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