Correlation Between Modine Manufacturing and Ecolab
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Ecolab 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 Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Ecolab Inc, you can compare the effects of market volatilities on Modine Manufacturing and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Ecolab.
Diversification Opportunities for Modine Manufacturing and Ecolab
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Modine and Ecolab is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Ecolab go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Ecolab
Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the Ecolab. In addition to that, Modine Manufacturing is 5.96 times more volatile than Ecolab Inc. It trades about -0.1 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.35 per unit of volatility. If you would invest 23,193 in Ecolab Inc on November 4, 2024 and sell it today you would earn a total of 1,826 from holding Ecolab Inc or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Ecolab Inc
Performance |
| Timeline |
| Modine Manufacturing |
| Ecolab Inc |
Modine Manufacturing and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Ecolab
The main advantage of trading using opposite Modine Manufacturing and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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