Correlation Between Modine Manufacturing and New Providence
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and New Providence 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 New Providence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and New Providence Acquisition, you can compare the effects of market volatilities on Modine Manufacturing and New Providence 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 New Providence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and New Providence.
Diversification Opportunities for Modine Manufacturing and New Providence
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and New is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and New Providence Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Providence Acqui 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 New Providence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Providence Acqui has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and New Providence go up and down completely randomly.
Pair Corralation between Modine Manufacturing and New Providence
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 6.72 times more return on investment than New Providence. However, Modine Manufacturing is 6.72 times more volatile than New Providence Acquisition. It trades about 0.28 of its potential returns per unit of risk. New Providence Acquisition is currently generating about -0.38 per unit of risk. If you would invest 10,977 in Modine Manufacturing on September 3, 2024 and sell it today you would earn a total of 2,602 from holding Modine Manufacturing or generate 23.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 35.0% |
| Values | Daily Returns |
Modine Manufacturing vs. New Providence Acquisition
Performance |
| Timeline |
| Modine Manufacturing |
| New Providence Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Modine Manufacturing and New Providence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and New Providence
The main advantage of trading using opposite Modine Manufacturing and New Providence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, New Providence 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 New Providence will offset losses from the drop in New Providence's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| New Providence vs. Stepan Company | New Providence vs. Consol Energy | New Providence vs. Gentex | New Providence vs. Olympic Steel |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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