Correlation Between Modine Manufacturing and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing and Adient PLC 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 Modine Manufacturing and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Adient PLC, you can compare the effects of market volatilities on Modine Manufacturing and Adient PLC 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 Modine Manufacturing with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Adient PLC.
Diversification Opportunities for Modine Manufacturing and Adient PLC
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Adient is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Modine Manufacturing 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 Modine Manufacturing are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Adient PLC go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Adient PLC
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 1.19 times less return on investment than Adient PLC. In addition to that, Modine Manufacturing is 1.46 times more volatile than Adient PLC. It trades about 0.12 of its total potential returns per unit of risk. Adient PLC is currently generating about 0.21 per unit of volatility. If you would invest 1,587 in Adient PLC on May 14, 2025 and sell it today you would earn a total of 600.00 from holding Adient PLC or generate 37.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Modine Manufacturing vs. Adient PLC
Performance |
Timeline |
Modine Manufacturing |
Adient PLC |
Modine Manufacturing and Adient PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Modine Manufacturing and Adient PLC
The main advantage of trading using opposite Modine Manufacturing and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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