Correlation Between Modine Manufacturing and Corporacion America

Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Corporacion America 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 Corporacion America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Modine Manufacturing and Corporacion America Airports, you can compare the effects of market volatilities on Modine Manufacturing and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Corporacion America.

Diversification Opportunities for Modine Manufacturing and Corporacion America

-0.1

Correlation Coefficient

Modine Manufacturing  Corporacion America

Good diversification

The 3 months correlation between Modine and Corporacion is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Corporacion America go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Corporacion America

Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.5 times more return on investment than Corporacion America. However, Modine Manufacturing is 1.5 times more volatile than Corporacion America Airports. It trades about 0.07 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.01 per unit of risk. If you would invest  11,283  in Modine Manufacturing on October 6, 2024 and sell it today you would earn a total of  961.00  from holding Modine Manufacturing or generate 8.52% 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.  Corporacion America Airports

Modine Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modine Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Modine Manufacturing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Corporacion America

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Modine Manufacturing and Corporacion America

The main advantage of trading using opposite Modine Manufacturing and Corporacion America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Corporacion America 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 Corporacion America will offset losses from the drop in Corporacion America's long position.

The idea behind Modine Manufacturing and Corporacion America Airports pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.