Correlation Between 191216DD9 and Modine Manufacturing

Can any of the company-specific risk be diversified away by investing in both 191216DD9 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 191216DD9 and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Modine Manufacturing, you can compare the effects of market volatilities on 191216DD9 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 191216DD9 with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216DD9 and Modine Manufacturing.

Diversification Opportunities for 191216DD9 and Modine Manufacturing

0.42

Correlation Coefficient

191216DD9  Modine Manufacturing

Very weak diversification

The 3 months correlation between 191216DD9 and Modine is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and 191216DD9 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 COCA COLA CO 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 191216DD9 i.e., 191216DD9 and Modine Manufacturing go up and down completely randomly.

Pair Corralation between 191216DD9 and Modine Manufacturing

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 0.09 times more return on investment than Modine Manufacturing. However, COCA COLA CO is 11.41 times less risky than Modine Manufacturing. It trades about 0.04 of its potential returns per unit of risk. Modine Manufacturing is currently generating about -0.02 per unit of risk. If you would invest  9,070  in COCA COLA CO on October 9, 2024 and sell it today you would earn a total of  62.00  from holding COCA COLA CO or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

COCA COLA CO  vs.  Modine Manufacturing

COCA A CO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 191216DD9 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 191216DD9 and Modine Manufacturing

The main advantage of trading using opposite 191216DD9 and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216DD9 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 COCA COLA CO 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.