Correlation Between Modine Manufacturing and Almacenes Xito

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

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

Diversification Opportunities for Modine Manufacturing and Almacenes Xito

0.13

Correlation Coefficient

Modine Manufacturing  Almacenes Xito

Average diversification

The 3 months correlation between Modine and Almacenes is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA 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 Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Almacenes Xito go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Almacenes Xito

Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.03 times more return on investment than Almacenes Xito. However, Modine Manufacturing is 1.03 times more volatile than Almacenes xito SA. It trades about 0.03 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.12 per unit of risk. If you would invest  12,877  in Modine Manufacturing on October 22, 2024 and sell it today you would earn a total of  403.00  from holding Modine Manufacturing or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Modine Manufacturing  vs.  Almacenes xito SA

Modine Manufacturing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Modine Manufacturing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Modine Manufacturing and Almacenes Xito

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

The idea behind Modine Manufacturing and Almacenes xito SA 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.