Correlation Between Modine Manufacturing and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Teleflex Incorporated 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 Teleflex Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Teleflex Incorporated, you can compare the effects of market volatilities on Modine Manufacturing and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Teleflex Incorporated.
Diversification Opportunities for Modine Manufacturing and Teleflex Incorporated
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Modine and Teleflex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Teleflex Incorporated
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 2.04 times more return on investment than Teleflex Incorporated. However, Modine Manufacturing is 2.04 times more volatile than Teleflex Incorporated. It trades about 0.1 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.07 per unit of risk. If you would invest 6,045 in Modine Manufacturing on September 20, 2024 and sell it today you would earn a total of 6,722 from holding Modine Manufacturing or generate 111.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Teleflex Incorporated
Performance |
| Timeline |
| Modine Manufacturing |
| Teleflex Incorporated |
Modine Manufacturing and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Teleflex Incorporated
The main advantage of trading using opposite Modine Manufacturing and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated's long position.| Modine Manufacturing vs. Ford Motor | Modine Manufacturing vs. General Motors | Modine Manufacturing vs. Goodyear Tire Rubber | Modine Manufacturing vs. Li Auto |
| Teleflex Incorporated vs. Avita Medical | Teleflex Incorporated vs. Inogen Inc | Teleflex Incorporated vs. Apyx Medical |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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