Correlation Between Modine Manufacturing and Gentex
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Gentex 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 Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Gentex, you can compare the effects of market volatilities on Modine Manufacturing and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Gentex.
Diversification Opportunities for Modine Manufacturing and Gentex
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Modine and Gentex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Gentex go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Gentex
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 2.68 times more return on investment than Gentex. However, Modine Manufacturing is 2.68 times more volatile than Gentex. It trades about 0.13 of its potential returns per unit of risk. Gentex is currently generating about 0.03 per unit of risk. If you would invest 3,281 in Modine Manufacturing on August 31, 2024 and sell it today you would earn a total of 10,298 from holding Modine Manufacturing or generate 313.87% 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. Gentex
Performance |
| Timeline |
| Modine Manufacturing |
| Gentex |
Modine Manufacturing and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Gentex
The main advantage of trading using opposite Modine Manufacturing and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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