Correlation Between Dairy Farm and MOOG INC
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and MOOG INC 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 Dairy Farm and MOOG INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and MOOG INC CL, you can compare the effects of market volatilities on Dairy Farm and MOOG INC 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 Dairy Farm with a short position of MOOG INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and MOOG INC.
Diversification Opportunities for Dairy Farm and MOOG INC
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dairy and MOOG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and MOOG INC CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOOG INC CL and Dairy Farm 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 Dairy Farm International are associated (or correlated) with MOOG INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOOG INC CL has no effect on the direction of Dairy Farm i.e., Dairy Farm and MOOG INC go up and down completely randomly.
Pair Corralation between Dairy Farm and MOOG INC
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the MOOG INC. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 3.24 times less risky than MOOG INC. The stock trades about -0.09 of its potential returns per unit of risk. The MOOG INC CL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,300 in MOOG INC CL on October 20, 2024 and sell it today you would earn a total of 200.00 from holding MOOG INC CL or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Dairy Farm International vs. MOOG INC CL
Performance |
| Timeline |
| Dairy Farm International |
| MOOG INC CL |
Dairy Farm and MOOG INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and MOOG INC
The main advantage of trading using opposite Dairy Farm and MOOG INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, MOOG INC 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 MOOG INC will offset losses from the drop in MOOG INC's long position.| Dairy Farm vs. Singapore Airlines Limited | Dairy Farm vs. SK TELECOM TDADR | Dairy Farm vs. China Eastern Airlines | Dairy Farm vs. Shenandoah Telecommunications |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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