Correlation Between Mercury Systems and Huntington Ingalls
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Huntington Ingalls 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 Huntington Ingalls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Huntington Ingalls Industries, you can compare the effects of market volatilities on Mercury Systems and Huntington Ingalls 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 Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Huntington Ingalls.
Diversification Opportunities for Mercury Systems and Huntington Ingalls
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercury and Huntington is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls 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 Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Mercury Systems i.e., Mercury Systems and Huntington Ingalls go up and down completely randomly.
Pair Corralation between Mercury Systems and Huntington Ingalls
Given the investment horizon of 90 days Mercury Systems is expected to under-perform the Huntington Ingalls. In addition to that, Mercury Systems is 1.5 times more volatile than Huntington Ingalls Industries. It trades about -0.01 of its total potential returns per unit of risk. Huntington Ingalls Industries is currently generating about 0.0 per unit of volatility. If you would invest 21,390 in Huntington Ingalls Industries on August 27, 2024 and sell it today you would lose (1,495) from holding Huntington Ingalls Industries or give up 6.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Huntington Ingalls Industries
Performance |
| Timeline |
| Mercury Systems |
| Huntington Ingalls |
Mercury Systems and Huntington Ingalls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Huntington Ingalls
The main advantage of trading using opposite Mercury Systems and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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