Correlation Between Xos and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both Xos 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 Xos and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xos Inc and Modine Manufacturing, you can compare the effects of market volatilities on Xos 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 Xos with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos and Modine Manufacturing.
Diversification Opportunities for Xos and Modine Manufacturing
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xos and Modine is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Xos 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 Xos Inc 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 Xos i.e., Xos and Modine Manufacturing go up and down completely randomly.
Pair Corralation between Xos and Modine Manufacturing
Considering the 90-day investment horizon Xos Inc is expected to under-perform the Modine Manufacturing. In addition to that, Xos is 1.45 times more volatile than Modine Manufacturing. It trades about -0.02 of its total potential returns per unit of risk. Modine Manufacturing is currently generating about 0.13 per unit of volatility. If you would invest 5,179 in Modine Manufacturing on August 27, 2024 and sell it today you would earn a total of 9,143 from holding Modine Manufacturing or generate 176.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xos Inc vs. Modine Manufacturing
Performance |
| Timeline |
| Xos Inc |
| Modine Manufacturing |
Xos and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xos and Modine Manufacturing
The main advantage of trading using opposite Xos and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos 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.| Xos vs. Lion Electric Corp | Xos vs. Nikola Corp | Xos vs. Wabash National | Xos vs. Hydrofarm Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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