Correlation Between Modine Manufacturing and Black Hills
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Black Hills 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 Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Black Hills, you can compare the effects of market volatilities on Modine Manufacturing and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Black Hills.
Diversification Opportunities for Modine Manufacturing and Black Hills
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Black is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Black Hills go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Black Hills
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.21 times less return on investment than Black Hills. In addition to that, Modine Manufacturing is 3.17 times more volatile than Black Hills. It trades about 0.07 of its total potential returns per unit of risk. Black Hills is currently generating about 0.27 per unit of volatility. If you would invest 5,972 in Black Hills on August 28, 2024 and sell it today you would earn a total of 494.00 from holding Black Hills or generate 8.27% 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. Black Hills
Performance |
| Timeline |
| Modine Manufacturing |
| Black Hills |
Modine Manufacturing and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Black Hills
The main advantage of trading using opposite Modine Manufacturing and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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