Correlation Between Simon Property and Modine Manufacturing

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

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

Diversification Opportunities for Simon Property and Modine Manufacturing

0.19

Correlation Coefficient

Simon Property  Modine Manufacturing

Average diversification

The 3 months correlation between Simon and Modine is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Simon Property and Modine Manufacturing

Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.32 times more return on investment than Modine Manufacturing. However, Simon Property Group is 3.17 times less risky than Modine Manufacturing. It trades about -0.12 of its potential returns per unit of risk. Modine Manufacturing is currently generating about -0.05 per unit of risk. If you would invest  6,196  in Simon Property Group on October 11, 2024 and sell it today you would lose (319.00) from holding Simon Property Group or give up 5.15% of portfolio value over 90 days.

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

Simon Property Group  vs.  Modine Manufacturing

Simon Property Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Simon Property and Modine Manufacturing

The main advantage of trading using opposite Simon Property and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.