Correlation Between Mercury Systems and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Park Electrochemical 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 Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Park Electrochemical, you can compare the effects of market volatilities on Mercury Systems and Park Electrochemical 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 Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Park Electrochemical.
Diversification Opportunities for Mercury Systems and Park Electrochemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mercury and Park is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical 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 Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Mercury Systems i.e., Mercury Systems and Park Electrochemical go up and down completely randomly.
Pair Corralation between Mercury Systems and Park Electrochemical
Given the investment horizon of 90 days Mercury Systems is expected to generate 1.75 times more return on investment than Park Electrochemical. However, Mercury Systems is 1.75 times more volatile than Park Electrochemical. It trades about 0.09 of its potential returns per unit of risk. Park Electrochemical is currently generating about 0.15 per unit of risk. If you would invest 3,620 in Mercury Systems on August 26, 2024 and sell it today you would earn a total of 474.00 from holding Mercury Systems or generate 13.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Park Electrochemical
Performance |
| Timeline |
| Mercury Systems |
| Park Electrochemical |
Mercury Systems and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Park Electrochemical
The main advantage of trading using opposite Mercury Systems and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |