Correlation Between Moog and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Moog and Airbus Group 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 Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moog Inc and Airbus Group NV, you can compare the effects of market volatilities on Moog and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moog and Airbus Group.
Diversification Opportunities for Moog and Airbus Group
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Moog and Airbus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Airbus Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group NV 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group NV has no effect on the direction of Moog i.e., Moog and Airbus Group go up and down completely randomly.
Pair Corralation between Moog and Airbus Group
Assuming the 90 days horizon Moog Inc is expected to generate 1.37 times more return on investment than Airbus Group. However, Moog is 1.37 times more volatile than Airbus Group NV. It trades about 0.1 of its potential returns per unit of risk. Airbus Group NV is currently generating about -0.05 per unit of risk. If you would invest 19,829 in Moog Inc on August 28, 2024 and sell it today you would earn a total of 1,638 from holding Moog Inc or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.35% |
| Values | Daily Returns |
Moog Inc vs. Airbus Group NV
Performance |
| Timeline |
| Moog Inc |
| Airbus Group NV |
Moog and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moog and Airbus Group
The main advantage of trading using opposite Moog and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moog position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.The idea behind Moog Inc and Airbus Group NV 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.| Airbus Group vs. Safran SA | Airbus Group vs. Moog Inc | Airbus Group vs. BAE Systems PLC | Airbus Group vs. Airbus Group SE |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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