Correlation Between SES AI and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both SES AI and Modine Manufacturing 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 SES AI and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SES AI Corp and Modine Manufacturing, you can compare the effects of market volatilities on SES AI and Modine Manufacturing 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 SES AI with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES AI and Modine Manufacturing.
Diversification Opportunities for SES AI and Modine Manufacturing
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SES and Modine is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SES AI Corp and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and SES AI 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 SES AI Corp are associated (or correlated) with Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of SES AI i.e., SES AI and Modine Manufacturing go up and down completely randomly.
Pair Corralation between SES AI and Modine Manufacturing
Considering the 90-day investment horizon SES AI Corp is expected to under-perform the Modine Manufacturing. In addition to that, SES AI is 1.64 times more volatile than Modine Manufacturing. It trades about -0.47 of its total potential returns per unit of risk. Modine Manufacturing is currently generating about 0.11 per unit of volatility. If you would invest 12,877 in Modine Manufacturing on August 23, 2024 and sell it today you would earn a total of 1,172 from holding Modine Manufacturing or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SES AI Corp vs. Modine Manufacturing
Performance |
| Timeline |
| SES AI Corp |
| Modine Manufacturing |
SES AI and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SES AI and Modine Manufacturing
The main advantage of trading using opposite SES AI and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SES AI position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI vs. Stoneridge |
| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
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 CEOs Directory module to screen CEOs from public companies around the world.
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