Correlation Between Modine Manufacturing and Albemarle
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Albemarle 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 Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Albemarle, you can compare the effects of market volatilities on Modine Manufacturing and Albemarle 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 Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Albemarle.
Diversification Opportunities for Modine Manufacturing and Albemarle
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Modine and Albemarle is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Albemarle go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Albemarle
Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the Albemarle. In addition to that, Modine Manufacturing is 3.14 times more volatile than Albemarle. It trades about -0.1 of its total potential returns per unit of risk. Albemarle is currently generating about -0.05 per unit of volatility. If you would invest 4,156 in Albemarle on November 4, 2024 and sell it today you would lose (104.00) from holding Albemarle or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Albemarle
Performance |
| Timeline |
| Modine Manufacturing |
| Albemarle |
Modine Manufacturing and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Albemarle
The main advantage of trading using opposite Modine Manufacturing and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Albemarle vs. Chemours Co | Albemarle vs. Dupont De Nemours | Albemarle vs. FutureFuel Corp | Albemarle vs. Ecovyst |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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