Correlation Between Modine Manufacturing and Miller Industries
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Miller Industries 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 Miller Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Miller Industries, you can compare the effects of market volatilities on Modine Manufacturing and Miller Industries 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 Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Miller Industries.
Diversification Opportunities for Modine Manufacturing and Miller Industries
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Miller is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Miller Industries go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Miller Industries
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.79 times more return on investment than Miller Industries. However, Modine Manufacturing is 1.79 times more volatile than Miller Industries. It trades about 0.12 of its potential returns per unit of risk. Miller Industries is currently generating about 0.1 per unit of risk. If you would invest 2,122 in Modine Manufacturing on August 23, 2024 and sell it today you would earn a total of 11,927 from holding Modine Manufacturing or generate 562.06% 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. Miller Industries
Performance |
| Timeline |
| Modine Manufacturing |
| Miller Industries |
Modine Manufacturing and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Miller Industries
The main advantage of trading using opposite Modine Manufacturing and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Miller Industries 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 Miller Industries will offset losses from the drop in Miller Industries' long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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