Correlation Between Mercury Systems and Cadre Holdings
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Cadre Holdings 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 Mercury Systems and Cadre Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Cadre Holdings, you can compare the effects of market volatilities on Mercury Systems and Cadre Holdings 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 Mercury Systems with a short position of Cadre Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Cadre Holdings.
Diversification Opportunities for Mercury Systems and Cadre Holdings
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercury and Cadre is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings and Mercury Systems 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 Mercury Systems are associated (or correlated) with Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Mercury Systems i.e., Mercury Systems and Cadre Holdings go up and down completely randomly.
Pair Corralation between Mercury Systems and Cadre Holdings
Given the investment horizon of 90 days Mercury Systems is expected to under-perform the Cadre Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Mercury Systems is 1.06 times less risky than Cadre Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The Cadre Holdings is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 3,217 in Cadre Holdings on November 3, 2024 and sell it today you would earn a total of 638.00 from holding Cadre Holdings or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Cadre Holdings
Performance |
| Timeline |
| Mercury Systems |
| Cadre Holdings |
Mercury Systems and Cadre Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Cadre Holdings
The main advantage of trading using opposite Mercury Systems and Cadre Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Cadre Holdings 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 Cadre Holdings will offset losses from the drop in Cadre Holdings' long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Cadre Holdings vs. European Wax Center | Cadre Holdings vs. Enfusion | Cadre Holdings vs. CiT Inc | Cadre Holdings vs. Core Main |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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