Correlation Between Modine Manufacturing and NL Industries
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and NL 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 NL 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 NL Industries, you can compare the effects of market volatilities on Modine Manufacturing and NL 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and NL Industries.
Diversification Opportunities for Modine Manufacturing and NL Industries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and NL Industries is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and NL Industries go up and down completely randomly.
Pair Corralation between Modine Manufacturing and NL Industries
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.3 times more return on investment than NL Industries. However, Modine Manufacturing is 1.3 times more volatile than NL Industries. It trades about 0.12 of its potential returns per unit of risk. NL Industries is currently generating about 0.03 per unit of risk. If you would invest 2,301 in Modine Manufacturing on October 25, 2024 and sell it today you would earn a total of 11,967 from holding Modine Manufacturing or generate 520.08% 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. NL Industries
Performance |
| Timeline |
| Modine Manufacturing |
| NL Industries |
Modine Manufacturing and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and NL Industries
The main advantage of trading using opposite Modine Manufacturing and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, NL 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 NL Industries will offset losses from the drop in NL Industries' long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |