Correlation Between Modine Manufacturing and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Asbury Automotive 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 Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Asbury Automotive Group, you can compare the effects of market volatilities on Modine Manufacturing and Asbury Automotive 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 Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Asbury Automotive.
Diversification Opportunities for Modine Manufacturing and Asbury Automotive
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Modine and Asbury is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive 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 Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Asbury Automotive go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Asbury Automotive
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.76 times more return on investment than Asbury Automotive. However, Modine Manufacturing is 1.76 times more volatile than Asbury Automotive Group. It trades about 0.25 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.28 per unit of risk. If you would invest 11,163 in Modine Manufacturing on September 2, 2024 and sell it today you would earn a total of 2,416 from holding Modine Manufacturing or generate 21.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Asbury Automotive Group
Performance |
| Timeline |
| Modine Manufacturing |
| Asbury Automotive |
Modine Manufacturing and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Asbury Automotive
The main advantage of trading using opposite Modine Manufacturing and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Asbury Automotive vs. Advance Auto Parts | Asbury Automotive vs. Tractor Supply | Asbury Automotive vs. Genuine Parts Co | Asbury Automotive vs. Five Below |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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