Correlation Between Mediag3 and Modine Manufacturing

Can any of the company-specific risk be diversified away by investing in both Mediag3 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 Mediag3 and Modine Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mediag3 and Modine Manufacturing, you can compare the effects of market volatilities on Mediag3 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 Mediag3 with a short position of Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mediag3 and Modine Manufacturing.

Diversification Opportunities for Mediag3 and Modine Manufacturing

0.0

Correlation Coefficient

Mediag3  Modine Manufacturing

Pay attention - limited upside

The 3 months correlation between Mediag3 and Modine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mediag3 and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Mediag3 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 Mediag3 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 Mediag3 i.e., Mediag3 and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Mediag3 and Modine Manufacturing

If you would invest  11,081  in Modine Manufacturing on September 12, 2024 and sell it today you would earn a total of  2,069  from holding Modine Manufacturing or generate 18.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mediag3  vs.  Modine Manufacturing

Mediag3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediag3 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mediag3 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Modine Manufacturing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Modine Manufacturing exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mediag3 and Modine Manufacturing

The main advantage of trading using opposite Mediag3 and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediag3 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 Mediag3 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.