Correlation Between Aerojet Rocketdyne and Mercury Systems
Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne and Mercury Systems 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 Aerojet Rocketdyne and Mercury Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Mercury Systems, you can compare the effects of market volatilities on Aerojet Rocketdyne and Mercury Systems 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 Aerojet Rocketdyne with a short position of Mercury Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Mercury Systems.
Diversification Opportunities for Aerojet Rocketdyne and Mercury Systems
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aerojet and Mercury is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Mercury Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Systems and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with Mercury Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Systems has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Mercury Systems go up and down completely randomly.
Pair Corralation between Aerojet Rocketdyne and Mercury Systems
If you would invest 3,326 in Mercury Systems on August 24, 2024 and sell it today you would earn a total of 672.00 from holding Mercury Systems or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Aerojet Rocketdyne Holdings vs. Mercury Systems
Performance |
| Timeline |
| Aerojet Rocketdyne |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Mercury Systems |
Aerojet Rocketdyne and Mercury Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerojet Rocketdyne and Mercury Systems
The main advantage of trading using opposite Aerojet Rocketdyne and Mercury Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne position performs unexpectedly, Mercury Systems 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 Mercury Systems will offset losses from the drop in Mercury Systems' long position.| Aerojet Rocketdyne vs. AAR Corp | Aerojet Rocketdyne vs. Curtiss Wright | Aerojet Rocketdyne vs. Hexcel | Aerojet Rocketdyne vs. Moog Inc |
| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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