Correlation Between Mercury Systems and Ehang Holdings
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Ehang 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 Ehang 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 Ehang Holdings, you can compare the effects of market volatilities on Mercury Systems and Ehang 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 Ehang Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Ehang Holdings.
Diversification Opportunities for Mercury Systems and Ehang Holdings
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercury and Ehang is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Ehang Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ehang 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 Ehang Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ehang Holdings has no effect on the direction of Mercury Systems i.e., Mercury Systems and Ehang Holdings go up and down completely randomly.
Pair Corralation between Mercury Systems and Ehang Holdings
Given the investment horizon of 90 days Mercury Systems is expected to under-perform the Ehang Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Mercury Systems is 1.83 times less risky than Ehang Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Ehang Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,352 in Ehang Holdings on August 27, 2024 and sell it today you would earn a total of 173.00 from holding Ehang Holdings or generate 12.8% 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. Ehang Holdings
Performance |
| Timeline |
| Mercury Systems |
| Ehang Holdings |
Mercury Systems and Ehang Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Ehang Holdings
The main advantage of trading using opposite Mercury Systems and Ehang Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Ehang 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 Ehang Holdings will offset losses from the drop in Ehang Holdings' long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Ehang Holdings vs. Redwire Corp | Ehang Holdings vs. Sidus Space | Ehang Holdings vs. Rocket Lab USA | Ehang Holdings vs. Momentus |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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