Correlation Between Ducommun Incorporated and Moog

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

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

Diversification Opportunities for Ducommun Incorporated and Moog

0.38

Correlation Coefficient

Ducommun Incorporated  Moog

Weak diversification

The 3 months correlation between Ducommun and Moog is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Ducommun Incorporated 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 Ducommun Incorporated 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 Ducommun Incorporated i.e., Ducommun Incorporated and Moog go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Moog

Considering the 90-day investment horizon Ducommun Incorporated is expected to under-perform the Moog. In addition to that, Ducommun Incorporated is 3.16 times more volatile than Moog Inc. It trades about -0.05 of its total potential returns per unit of risk. Moog Inc is currently generating about -0.12 per unit of volatility. If you would invest  21,534  in Moog Inc on September 19, 2024 and sell it today you would lose (460.00) from holding Moog Inc or give up 2.14% of portfolio value over 90 days.

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

Ducommun Incorporated  vs.  Moog Inc

Ducommun Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Moog Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 7 (%) 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 Ducommun Incorporated and Moog

The main advantage of trading using opposite Ducommun Incorporated and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ducommun Incorporated 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 Ducommun Incorporated 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.