Correlation Between Mercury Systems and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Dow Jones Industrial, you can compare the effects of market volatilities on Mercury Systems and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Dow Jones.
Diversification Opportunities for Mercury Systems and Dow Jones
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mercury and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Mercury Systems i.e., Mercury Systems and Dow Jones go up and down completely randomly.
Pair Corralation between Mercury Systems and Dow Jones
Given the investment horizon of 90 days Mercury Systems is expected to under-perform the Dow Jones. In addition to that, Mercury Systems is 2.92 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.42 per unit of volatility. If you would invest 4,239,227 in Dow Jones Industrial on November 2, 2024 and sell it today you would earn a total of 248,986 from holding Dow Jones Industrial or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Dow Jones Industrial
Performance |
| Timeline |
Mercury Systems and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Mercury Systems
Pair trading matchups for Mercury Systems
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Mercury Systems and Dow Jones
The main advantage of trading using opposite Mercury Systems and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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