Correlation Between MTU Aero and Workiva
Can any of the company-specific risk be diversified away by investing in both MTU Aero and Workiva 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 Workiva 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 Workiva, you can compare the effects of market volatilities on MTU Aero and Workiva 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 Workiva. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and Workiva.
Diversification Opportunities for MTU Aero and Workiva
Poor diversification
The 3 months correlation between MTU and Workiva is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines and Workiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workiva 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 Workiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workiva has no effect on the direction of MTU Aero i.e., MTU Aero and Workiva go up and down completely randomly.
Pair Corralation between MTU Aero and Workiva
Assuming the 90 days trading horizon MTU Aero Engines is expected to generate 0.47 times more return on investment than Workiva. However, MTU Aero Engines is 2.11 times less risky than Workiva. It trades about 0.05 of its potential returns per unit of risk. Workiva is currently generating about -0.09 per unit of risk. If you would invest 32,170 in MTU Aero Engines on November 2, 2024 and sell it today you would earn a total of 580.00 from holding MTU Aero Engines or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTU Aero Engines vs. Workiva
Performance |
| Timeline |
| MTU Aero Engines |
| Workiva |
MTU Aero and Workiva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTU Aero and Workiva
The main advantage of trading using opposite MTU Aero and Workiva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero position performs unexpectedly, Workiva 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 Workiva will offset losses from the drop in Workiva's long position.| MTU Aero vs. The Boeing | MTU Aero vs. Lockheed Martin | MTU Aero vs. Lockheed Martin | MTU Aero vs. Airbus SE |
| Workiva vs. Cass Information Systems | Workiva vs. Easy Software AG | Workiva vs. Information Services International Dentsu | Workiva vs. Linedata Services SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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