Correlation Between Modine Manufacturing and Loyalty Ventures

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

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

Diversification Opportunities for Modine Manufacturing and Loyalty Ventures

-0.09

Correlation Coefficient

Modine Manufacturing  Loyalty Ventures

Good diversification

The 3 months correlation between Modine and Loyalty is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Loyalty Ventures go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Loyalty Ventures

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

Modine Manufacturing  vs.  Loyalty Ventures

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Modine Manufacturing and Loyalty Ventures

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

The idea behind Modine Manufacturing and Loyalty Ventures 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..