Correlation Between Mosaic and Modine Manufacturing

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

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

Diversification Opportunities for Mosaic and Modine Manufacturing

0.19

Correlation Coefficient

Mosaic  Modine Manufacturing

Average diversification

The 3 months correlation between Mosaic and Modine is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Mosaic 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 The Mosaic are associated (or correlated) with Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of Mosaic i.e., Mosaic and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Mosaic and Modine Manufacturing

Considering the 90-day investment horizon The Mosaic is expected to under-perform the Modine Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, The Mosaic is 1.66 times less risky than Modine Manufacturing. The stock trades about -0.04 of its potential returns per unit of risk. The Modine Manufacturing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,244  in Modine Manufacturing on October 7, 2024 and sell it today you would earn a total of  10,000  from holding Modine Manufacturing or generate 445.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Mosaic  vs.  Modine Manufacturing

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Mosaic and Modine Manufacturing

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

The idea behind The Mosaic and Modine Manufacturing 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.