Correlation Between Safran SA and Moog
Can any of the company-specific risk be diversified away by investing in both Safran SA 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 Safran SA and Moog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Moog Inc, you can compare the effects of market volatilities on Safran SA 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 Safran SA with a short position of Moog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Moog.
Diversification Opportunities for Safran SA and Moog
Very weak diversification
The 3 months correlation between Safran and Moog is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Safran SA 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 Safran SA 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 Safran SA i.e., Safran SA and Moog go up and down completely randomly.
Pair Corralation between Safran SA and Moog
Assuming the 90 days horizon Safran SA is expected to generate 24.43 times less return on investment than Moog. But when comparing it to its historical volatility, Safran SA is 1.63 times less risky than Moog. It trades about 0.02 of its potential returns per unit of risk. Moog Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 19,077 in Moog Inc on August 28, 2024 and sell it today you would earn a total of 2,390 from holding Moog Inc or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Safran SA vs. Moog Inc
Performance |
| Timeline |
| Safran SA |
| Moog Inc |
Safran SA and Moog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Moog
The main advantage of trading using opposite Safran SA and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA 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.| Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Park Electrochemical | Safran SA vs. Triumph Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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