Correlation Between Modine Manufacturing and Stellantis

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

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

Diversification Opportunities for Modine Manufacturing and Stellantis

-0.4

Correlation Coefficient

Modine Manufacturing  Stellantis

Very good diversification

The 3 months correlation between Modine and Stellantis is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV 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 Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Stellantis go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Stellantis

Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the Stellantis. In addition to that, Modine Manufacturing is 2.22 times more volatile than Stellantis NV. It trades about -0.13 of its total potential returns per unit of risk. Stellantis NV is currently generating about 0.06 per unit of volatility. If you would invest  1,320  in Stellantis NV on November 28, 2024 and sell it today you would earn a total of  83.00  from holding Stellantis NV or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Modine Manufacturing  vs.  Stellantis NV

Modine Manufacturing

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Stellantis NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stellantis NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Stellantis may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Modine Manufacturing and Stellantis

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

The idea behind Modine Manufacturing and Stellantis NV 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.