Correlation Between Espey Mfg and Moog

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

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

Diversification Opportunities for Espey Mfg and Moog

0.12

Correlation Coefficient

Espey Mfg  Moog

Average diversification

The 3 months correlation between Espey and Moog is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Espey Mfg 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 Espey Mfg Electronics 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 Espey Mfg i.e., Espey Mfg and Moog go up and down completely randomly.

Pair Corralation between Espey Mfg and Moog

Considering the 90-day investment horizon Espey Mfg is expected to generate 1.03 times less return on investment than Moog. In addition to that, Espey Mfg is 1.34 times more volatile than Moog Inc. It trades about 0.07 of its total potential returns per unit of risk. Moog Inc is currently generating about 0.1 per unit of volatility. If you would invest  8,658  in Moog Inc on September 28, 2024 and sell it today you would earn a total of  11,190  from holding Moog Inc or generate 129.24% return on investment over 90 days.

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

Espey Mfg Electronics  vs.  Moog Inc

Espey Mfg Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Espey Mfg Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Espey Mfg is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Moog Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moog Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Moog is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Espey Mfg and Moog

The main advantage of trading using opposite Espey Mfg and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg 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 Espey Mfg Electronics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.