Correlation Between Loyalty Ventures and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both Loyalty Ventures 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 Loyalty Ventures and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loyalty Ventures and Modine Manufacturing, you can compare the effects of market volatilities on Loyalty Ventures 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 Loyalty Ventures with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loyalty Ventures and Modine Manufacturing.
Diversification Opportunities for Loyalty Ventures and Modine Manufacturing
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Loyalty and Modine is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Loyalty Ventures and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Loyalty Ventures 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 Loyalty Ventures 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 Loyalty Ventures i.e., Loyalty Ventures and Modine Manufacturing go up and down completely randomly.
Pair Corralation between Loyalty Ventures and Modine Manufacturing
If you would invest 6,991 in Modine Manufacturing on October 2, 2024 and sell it today you would earn a total of 4,710 from holding Modine Manufacturing or generate 67.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 0.44% |
Values | Daily Returns |
Loyalty Ventures vs. Modine Manufacturing
Performance |
Timeline |
Loyalty Ventures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Modine Manufacturing |
Loyalty Ventures and Modine Manufacturing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loyalty Ventures and Modine Manufacturing
The main advantage of trading using opposite Loyalty Ventures and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loyalty Ventures 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.Loyalty Ventures vs. Amkor Technology | Loyalty Ventures vs. Harmony Gold Mining | Loyalty Ventures vs. Kulicke and Soffa | Loyalty Ventures vs. Vindicator Silver Lead Mining |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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