Correlation Between Compagnie Générale and Modine Manufacturing

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

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

Diversification Opportunities for Compagnie Générale and Modine Manufacturing

-0.34

Correlation Coefficient

Compagnie Générale  Modine Manufacturing

Very good diversification

The 3 months correlation between Compagnie and Modine is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Gnrale des and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Compagnie Générale 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 Compagnie Gnrale des 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 Compagnie Générale i.e., Compagnie Générale and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Compagnie Générale and Modine Manufacturing

Assuming the 90 days horizon Compagnie Gnrale des is expected to under-perform the Modine Manufacturing. In addition to that, Compagnie Générale is 1.15 times more volatile than Modine Manufacturing. It trades about -0.04 of its total potential returns per unit of risk. Modine Manufacturing is currently generating about 0.11 per unit of volatility. If you would invest  10,831  in Modine Manufacturing on September 3, 2024 and sell it today you would earn a total of  2,748  from holding Modine Manufacturing or generate 25.37% return on investment over 90 days.

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

Compagnie Gnrale des  vs.  Modine Manufacturing

Compagnie Gnrale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Gnrale des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Modine Manufacturing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 8 (%) 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 Compagnie Générale and Modine Manufacturing

The main advantage of trading using opposite Compagnie Générale and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Générale 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 Compagnie Gnrale des 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 Transaction History module to view history of all your transactions and understand their impact on performance.