Correlation Between Moog and Curtiss Wright
Can any of the company-specific risk be diversified away by investing in both Moog and Curtiss Wright 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 Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moog Inc and Curtiss Wright, you can compare the effects of market volatilities on Moog and Curtiss Wright 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 Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moog and Curtiss Wright.
Diversification Opportunities for Moog and Curtiss Wright
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Moog and Curtiss is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright 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 Curtiss Wright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Wright has no effect on the direction of Moog i.e., Moog and Curtiss Wright go up and down completely randomly.
Pair Corralation between Moog and Curtiss Wright
Assuming the 90 days horizon Moog Inc is expected to generate 1.13 times more return on investment than Curtiss Wright. However, Moog is 1.13 times more volatile than Curtiss Wright. It trades about 0.25 of its potential returns per unit of risk. Curtiss Wright is currently generating about 0.14 per unit of risk. If you would invest 19,077 in Moog Inc on August 27, 2024 and sell it today you would earn a total of 2,390 from holding Moog Inc or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Moog Inc vs. Curtiss Wright
Performance |
| Timeline |
| Moog Inc |
| Curtiss Wright |
Moog and Curtiss Wright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moog and Curtiss Wright
The main advantage of trading using opposite Moog and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moog position performs unexpectedly, Curtiss Wright 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 Curtiss Wright will offset losses from the drop in Curtiss Wright's long position.The idea behind Moog Inc and Curtiss Wright 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.| Curtiss Wright vs. Mercury Systems | Curtiss Wright vs. AAR Corp | Curtiss Wright vs. Ducommun Incorporated | Curtiss Wright vs. Moog Inc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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