Correlation Between Momentus and Mercury Systems
Can any of the company-specific risk be diversified away by investing in both Momentus 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 Momentus and Mercury Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentus and Mercury Systems, you can compare the effects of market volatilities on Momentus 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 Momentus with a short position of Mercury Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentus and Mercury Systems.
Diversification Opportunities for Momentus and Mercury Systems
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Momentus and Mercury is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Momentus and Mercury Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Systems and Momentus 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 Momentus 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 Momentus i.e., Momentus and Mercury Systems go up and down completely randomly.
Pair Corralation between Momentus and Mercury Systems
Given the investment horizon of 90 days Momentus is expected to generate 6.11 times more return on investment than Mercury Systems. However, Momentus is 6.11 times more volatile than Mercury Systems. It trades about 0.05 of its potential returns per unit of risk. Mercury Systems is currently generating about 0.06 per unit of risk. If you would invest 73.00 in Momentus on September 2, 2024 and sell it today you would lose (12.00) from holding Momentus or give up 16.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Momentus vs. Mercury Systems
Performance |
| Timeline |
| Momentus |
| Mercury Systems |
Momentus and Mercury Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentus and Mercury Systems
The main advantage of trading using opposite Momentus and Mercury Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentus 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.| Momentus vs. Planet Labs PBC | Momentus vs. Rocket Lab USA | Momentus vs. Redwire Corp | Momentus vs. Virgin Galactic Holdings |
| Mercury Systems vs. Archer Aviation | Mercury Systems vs. Rocket Lab USA | Mercury Systems vs. Lilium NV | Mercury Systems vs. HEICO |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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