Correlation Between 26442CAM6 and Modine Manufacturing

Can any of the company-specific risk be diversified away by investing in both 26442CAM6 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 26442CAM6 and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY CAROLINAS and Modine Manufacturing, you can compare the effects of market volatilities on 26442CAM6 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 26442CAM6 with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442CAM6 and Modine Manufacturing.

Diversification Opportunities for 26442CAM6 and Modine Manufacturing

-0.09

Correlation Coefficient

26442CAM6  Modine Manufacturing

Good diversification

The 3 months correlation between 26442CAM6 and Modine is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY CAROLINAS and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and 26442CAM6 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 DUKE ENERGY CAROLINAS 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 26442CAM6 i.e., 26442CAM6 and Modine Manufacturing go up and down completely randomly.

Pair Corralation between 26442CAM6 and Modine Manufacturing

Assuming the 90 days trading horizon DUKE ENERGY CAROLINAS is expected to generate 0.23 times more return on investment than Modine Manufacturing. However, DUKE ENERGY CAROLINAS is 4.33 times less risky than Modine Manufacturing. It trades about 0.09 of its potential returns per unit of risk. Modine Manufacturing is currently generating about -0.07 per unit of risk. If you would invest  8,706  in DUKE ENERGY CAROLINAS on December 24, 2024 and sell it today you would earn a total of  467.00  from holding DUKE ENERGY CAROLINAS or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

DUKE ENERGY CAROLINAS  vs.  Modine Manufacturing

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY CAROLINAS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 26442CAM6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Modine Manufacturing

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with 26442CAM6 and Modine Manufacturing

The main advantage of trading using opposite 26442CAM6 and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442CAM6 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 DUKE ENERGY CAROLINAS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.