Correlation Between Modine Manufacturing and INTNED

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

By analyzing existing cross correlation between Modine Manufacturing and INTNED 575, you can compare the effects of market volatilities on Modine Manufacturing and INTNED 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 INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and INTNED.

Diversification Opportunities for Modine Manufacturing and INTNED

-0.17

Correlation Coefficient

Modine Manufacturing  INTNED

Good diversification

The 3 months correlation between Modine and INTNED is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and INTNED 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 575 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 INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 575 has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and INTNED go up and down completely randomly.

Pair Corralation between Modine Manufacturing and INTNED

Considering the 90-day investment horizon Modine Manufacturing is expected to generate 2.4 times more return on investment than INTNED. However, Modine Manufacturing is 2.4 times more volatile than INTNED 575. It trades about 0.12 of its potential returns per unit of risk. INTNED 575 is currently generating about 0.01 per unit of risk. If you would invest  2,298  in Modine Manufacturing on October 21, 2024 and sell it today you would earn a total of  10,982  from holding Modine Manufacturing or generate 477.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Modine Manufacturing  vs.  INTNED 575

Modine Manufacturing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

INTNED 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTNED 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INTNED 575 investors.

Pair Trading with Modine Manufacturing and INTNED

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

The idea behind Modine Manufacturing and INTNED 575 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.