Correlation Between Mercury Systems and Moog
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Moog 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 Moog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Moog Inc, you can compare the effects of market volatilities on Mercury Systems and Moog 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 Moog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Moog.
Diversification Opportunities for Mercury Systems and Moog
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercury and Moog is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc 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 Moog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moog Inc has no effect on the direction of Mercury Systems i.e., Mercury Systems and Moog go up and down completely randomly.
Pair Corralation between Mercury Systems and Moog
Given the investment horizon of 90 days Mercury Systems is expected to generate 1.82 times less return on investment than Moog. In addition to that, Mercury Systems is 1.54 times more volatile than Moog Inc. It trades about 0.04 of its total potential returns per unit of risk. Moog Inc is currently generating about 0.11 per unit of volatility. If you would invest 13,912 in Moog Inc on August 26, 2024 and sell it today you would earn a total of 8,344 from holding Moog Inc or generate 59.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Moog Inc
Performance |
| Timeline |
| Mercury Systems |
| Moog Inc |
Mercury Systems and Moog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Moog
The main advantage of trading using opposite Mercury Systems and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Moog 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 Moog will offset losses from the drop in Moog's long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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