Correlation Between Cadre Holdings and Mercury Systems
Can any of the company-specific risk be diversified away by investing in both Cadre Holdings 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 Cadre Holdings and Mercury Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadre Holdings and Mercury Systems, you can compare the effects of market volatilities on Cadre Holdings 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 Cadre Holdings with a short position of Mercury Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadre Holdings and Mercury Systems.
Diversification Opportunities for Cadre Holdings and Mercury Systems
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cadre and Mercury is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cadre Holdings and Mercury Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Systems and Cadre Holdings 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 Cadre 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 Cadre Holdings i.e., Cadre Holdings and Mercury Systems go up and down completely randomly.
Pair Corralation between Cadre Holdings and Mercury Systems
Given the investment horizon of 90 days Cadre Holdings is expected to generate 1.06 times more return on investment than Mercury Systems. However, Cadre Holdings is 1.06 times more volatile than Mercury Systems. It trades about 0.4 of its potential returns per unit of risk. Mercury Systems is currently generating about -0.02 per unit of risk. If you would invest 3,217 in Cadre Holdings on November 3, 2024 and sell it today you would earn a total of 638.00 from holding Cadre Holdings or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadre Holdings vs. Mercury Systems
Performance |
| Timeline |
| Cadre Holdings |
| Mercury Systems |
Cadre Holdings and Mercury Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadre Holdings and Mercury Systems
The main advantage of trading using opposite Cadre Holdings and Mercury Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadre Holdings 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.| Cadre Holdings vs. European Wax Center | Cadre Holdings vs. Enfusion | Cadre Holdings vs. CiT Inc | Cadre Holdings vs. Core Main |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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