Correlation Between Modine Manufacturing and 26875PAP6

Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and 26875PAP6 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 26875PAP6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Modine Manufacturing and EOG RES INC, you can compare the effects of market volatilities on Modine Manufacturing and 26875PAP6 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 26875PAP6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and 26875PAP6.

Diversification Opportunities for Modine Manufacturing and 26875PAP6

0.39

Correlation Coefficient

Modine Manufacturing  26875PAP6

Weak diversification

The 3 months correlation between Modine and 26875PAP6 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and EOG RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG RES INC 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 26875PAP6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG RES INC has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and 26875PAP6 go up and down completely randomly.

Pair Corralation between Modine Manufacturing and 26875PAP6

Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the 26875PAP6. In addition to that, Modine Manufacturing is 12.82 times more volatile than EOG RES INC. It trades about -0.14 of its total potential returns per unit of risk. EOG RES INC is currently generating about -0.23 per unit of volatility. If you would invest  9,952  in EOG RES INC on October 12, 2024 and sell it today you would lose (104.00) from holding EOG RES INC or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Modine Manufacturing  vs.  EOG RES INC

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

EOG RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAP6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Modine Manufacturing and 26875PAP6

The main advantage of trading using opposite Modine Manufacturing and 26875PAP6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, 26875PAP6 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 26875PAP6 will offset losses from the drop in 26875PAP6's long position.

The idea behind Modine Manufacturing and EOG RES INC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.