Correlation Between MTU Aero and National Presto
Can any of the company-specific risk be diversified away by investing in both MTU Aero and National Presto 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 MTU Aero and National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTU Aero Engines and National Presto Industries, you can compare the effects of market volatilities on MTU Aero and National Presto 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 MTU Aero with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and National Presto.
Diversification Opportunities for MTU Aero and National Presto
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between MTU and National is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and MTU Aero 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 MTU Aero Engines are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of MTU Aero i.e., MTU Aero and National Presto go up and down completely randomly.
Pair Corralation between MTU Aero and National Presto
Assuming the 90 days horizon MTU Aero is expected to generate 3.55 times less return on investment than National Presto. But when comparing it to its historical volatility, MTU Aero Engines is 1.61 times less risky than National Presto. It trades about 0.06 of its potential returns per unit of risk. National Presto Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,450 in National Presto Industries on August 31, 2024 and sell it today you would earn a total of 408.00 from holding National Presto Industries or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTU Aero Engines vs. National Presto Industries
Performance |
| Timeline |
| MTU Aero Engines |
| National Presto Indu |
MTU Aero and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTU Aero and National Presto
The main advantage of trading using opposite MTU Aero and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| MTU Aero vs. Firan Technology Group | MTU Aero vs. 808 Renewable Energy | MTU Aero vs. Park Electrochemical | MTU Aero vs. Innovative Solutions and |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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