Correlation Between Modine Manufacturing and CVR Partners

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

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

Diversification Opportunities for Modine Manufacturing and CVR Partners

0.03

Correlation Coefficient

Modine Manufacturing  CVR Partners

Significant diversification

The 3 months correlation between Modine and CVR is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and CVR Partners go up and down completely randomly.

Pair Corralation between Modine Manufacturing and CVR Partners

Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the CVR Partners. In addition to that, Modine Manufacturing is 3.23 times more volatile than CVR Partners LP. It trades about -0.07 of its total potential returns per unit of risk. CVR Partners LP is currently generating about 0.05 per unit of volatility. If you would invest  7,240  in CVR Partners LP on December 18, 2024 and sell it today you would earn a total of  321.00  from holding CVR Partners LP or generate 4.43% 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.  CVR Partners LP

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CVR Partners LP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CVR Partners is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Modine Manufacturing and CVR Partners

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

The idea behind Modine Manufacturing and CVR Partners LP 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .