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

0.36

Correlation Coefficient

Mercury Systems  Moog

Weak diversification

The 3 months correlation between Mercury and Moog is 0.36. 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 1.1 times more return on investment than Moog. However, Mercury Systems is 1.1 times more volatile than Moog Inc. It trades about 0.13 of its potential returns per unit of risk. Moog Inc is currently generating about 0.14 per unit of risk. If you would invest  2,934  in Mercury Systems on March 3, 2024 and sell it today you would earn a total of  161.00  from holding Mercury Systems or generate 5.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Mercury Systems  vs.  Moog Inc

Mercury Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mercury Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Mercury Systems is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Moog Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Moog sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Mercury Systems and Moog Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.