Correlation Between Modine Manufacturing and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and ReTo Eco 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 ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and ReTo Eco Solutions, you can compare the effects of market volatilities on Modine Manufacturing and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and ReTo Eco.
Diversification Opportunities for Modine Manufacturing and ReTo Eco
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Modine and ReTo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and ReTo Eco go up and down completely randomly.
Pair Corralation between Modine Manufacturing and ReTo Eco
Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the ReTo Eco. But the stock apears to be less risky and, when comparing its historical volatility, Modine Manufacturing is 2.37 times less risky than ReTo Eco. The stock trades about -0.03 of its potential returns per unit of risk. The ReTo Eco Solutions is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 158.00 in ReTo Eco Solutions on December 4, 2024 and sell it today you would lose (81.00) from holding ReTo Eco Solutions or give up 51.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. ReTo Eco Solutions
Performance |
| Timeline |
| Modine Manufacturing |
| ReTo Eco Solutions |
Modine Manufacturing and ReTo Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and ReTo Eco
The main advantage of trading using opposite Modine Manufacturing and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| ReTo Eco vs. Martin Marietta Materials | ReTo Eco vs. Vulcan Materials | ReTo Eco vs. United States Lime | ReTo Eco vs. James Hardie Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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