Correlation Between CPI Aerostructures and Moog

Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures 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 CPI Aerostructures and Moog into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPI Aerostructures and Moog Inc, you can compare the effects of market volatilities on CPI Aerostructures 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 CPI Aerostructures with a short position of Moog. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and Moog.

Diversification Opportunities for CPI Aerostructures and Moog

0.6

Correlation Coefficient

CPI Aerostructures  Moog

Poor diversification

The 3 months correlation between CPI and Moog is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and CPI Aerostructures 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 CPI Aerostructures 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 CPI Aerostructures i.e., CPI Aerostructures and Moog go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Moog

Considering the 90-day investment horizon CPI Aerostructures is expected to generate 1.88 times more return on investment than Moog. However, CPI Aerostructures is 1.88 times more volatile than Moog Inc. It trades about -0.03 of its potential returns per unit of risk. Moog Inc is currently generating about -0.07 per unit of risk. If you would invest  391.00  in CPI Aerostructures on December 26, 2024 and sell it today you would lose (48.00) from holding CPI Aerostructures or give up 12.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CPI Aerostructures  vs.  Moog Inc

CPI Aerostructures

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPI Aerostructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Moog Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moog Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CPI Aerostructures and Moog

The main advantage of trading using opposite CPI Aerostructures and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures 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 CPI Aerostructures 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.