Correlation Between Moog and V2X
Can any of the company-specific risk be diversified away by investing in both Moog and V2X 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 Moog and V2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moog Inc and V2X Inc, you can compare the effects of market volatilities on Moog and V2X 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 Moog with a short position of V2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moog and V2X.
Diversification Opportunities for Moog and V2X
Very weak diversification
The 3 months correlation between Moog and V2X is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and V2X Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2X Inc and Moog 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 Moog Inc are associated (or correlated) with V2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2X Inc has no effect on the direction of Moog i.e., Moog and V2X go up and down completely randomly.
Pair Corralation between Moog and V2X
Assuming the 90 days horizon Moog Inc is expected to generate 0.8 times more return on investment than V2X. However, Moog Inc is 1.25 times less risky than V2X. It trades about 0.01 of its potential returns per unit of risk. V2X Inc is currently generating about 0.0 per unit of risk. If you would invest 18,671 in Moog Inc on November 2, 2024 and sell it today you would earn a total of 86.00 from holding Moog Inc or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moog Inc vs. V2X Inc
Performance |
| Timeline |
| Moog Inc |
| V2X Inc |
Moog and V2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moog and V2X
The main advantage of trading using opposite Moog and V2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moog position performs unexpectedly, V2X 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 V2X will offset losses from the drop in V2X's long position.The idea behind Moog Inc and V2X Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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