Correlation Between Modine Manufacturing and Mayfair Gold

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

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

Diversification Opportunities for Modine Manufacturing and Mayfair Gold

-0.21

Correlation Coefficient

Modine Manufacturing  Mayfair Gold

Very good diversification

The 3 months correlation between Modine and Mayfair is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Mayfair Gold go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Mayfair Gold

Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.39 times more return on investment than Mayfair Gold. However, Modine Manufacturing is 1.39 times more volatile than Mayfair Gold Corp. It trades about 0.1 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about -0.02 per unit of risk. If you would invest  5,260  in Modine Manufacturing on September 28, 2024 and sell it today you would earn a total of  6,790  from holding Modine Manufacturing or generate 129.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Modine Manufacturing  vs.  Mayfair Gold Corp

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Mayfair Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfair Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Modine Manufacturing and Mayfair Gold

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

The idea behind Modine Manufacturing and Mayfair Gold Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.