Correlation Between Envista Holdings and Modine Manufacturing

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

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

Diversification Opportunities for Envista Holdings and Modine Manufacturing

0.37

Correlation Coefficient

Envista Holdings  Modine Manufacturing

Weak diversification

The 3 months correlation between Envista and Modine is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Envista Holdings 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 Envista Holdings Corp 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 Envista Holdings i.e., Envista Holdings and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Envista Holdings and Modine Manufacturing

Given the investment horizon of 90 days Envista Holdings is expected to generate 1.76 times less return on investment than Modine Manufacturing. But when comparing it to its historical volatility, Envista Holdings Corp is 1.28 times less risky than Modine Manufacturing. It trades about 0.32 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  11,858  in Modine Manufacturing on October 25, 2024 and sell it today you would earn a total of  2,410  from holding Modine Manufacturing or generate 20.32% return on investment over 90 days.

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

Envista Holdings Corp  vs.  Modine Manufacturing

Envista Holdings Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Modine Manufacturing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Modine Manufacturing exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envista Holdings and Modine Manufacturing

The main advantage of trading using opposite Envista Holdings and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envista Holdings 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 Envista Holdings Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.