Correlation Between Modine Manufacturing and Franklin Credit
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Franklin Credit 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 Franklin Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Franklin Credit Management, you can compare the effects of market volatilities on Modine Manufacturing and Franklin Credit 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 Franklin Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Franklin Credit.
Diversification Opportunities for Modine Manufacturing and Franklin Credit
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Modine and Franklin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana 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 Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Franklin Credit go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Franklin Credit
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 0.81 times more return on investment than Franklin Credit. However, Modine Manufacturing is 1.23 times less risky than Franklin Credit. It trades about 0.07 of its potential returns per unit of risk. Franklin Credit Management is currently generating about -0.11 per unit of risk. If you would invest 13,106 in Modine Manufacturing on August 27, 2024 and sell it today you would earn a total of 634.00 from holding Modine Manufacturing or generate 4.84% 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. Franklin Credit Management
Performance |
| Timeline |
| Modine Manufacturing |
| Franklin Credit Mana |
Modine Manufacturing and Franklin Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Franklin Credit
The main advantage of trading using opposite Modine Manufacturing and Franklin Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Franklin Credit 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 Franklin Credit will offset losses from the drop in Franklin Credit's long position.The idea behind Modine Manufacturing and Franklin Credit Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin Credit vs. Invesco High Income | Franklin Credit vs. Blackrock Muniholdings Ny | Franklin Credit vs. MFS Investment Grade | Franklin Credit vs. Federated Premier Municipal |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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